Mainzeal has put its high-profile Mt Wellington site used for assembling commercial office facades on the market in a move designed to rationalise its non-core property investments.
The 1.1ha warehouse and office property, on the intersection of Carbine Rd and South-Eastern Highway, was bought by Mainzeal in 2005 as a development site but the global financial crisis intervened and the company now uses the property for its subsidiary business.
Grant Massey, head of development for Mainzeal's parent company Richina, says that, while the industrial market is now recovering, the company is concentrating on office and residential development and the expanding Christchurch market.
"We are selling the Mt Wellington property on a leaseback basis to retain flexibility for our subsidiary company King Facade and the sale will help fund other developments we have planned."
Savills is marketing the property at 51-53 Carbine Rd by private treaty closing on December 7 and Savill's joint managing director Paddy Callesen and broker Bruce Webb say ultimately the highest and best use for the site is total redevelopment.
"If a new owner wants to redevelop straight away, Mainzeal will sell with vacant possession," says Callesen.
"The property is in two titles and the 2370sq m warehouse/office covers just 20 per cent of the entire site," says Callesen. "More than 4000sq m of bare land can be initially developed if a new owner takes the income from King Faade's continued tenancy of the office and warehouse."
King Facade has a six-year lease at an annual rent of $279,000 and a 12-month demolition clause is part of the agreement. A further $36,000 is generated from car parking. "This income stream could easily be increased through local demand for car parking," Callesen says.
He says several office and/or showroom schemes for the site were consented by the council. "Mainzeal had no option but to put development on hold while the global financial meltdown took hold. It also gave the company the opportunity to use the site for its facade business.
"As the industrial market consistently improves, the property is now an attractive option for an owner/occupier, developer, land banker or investor. If a new owner eventually develops the entire property it could take 6000sq m of buildings covering 55 per cent of the site.
"It would be hard to find a better located property anywhere for redevelopment," Callesen says. "Sylvia Park is opposite the site and the property has vast exposure to more than 30,000 cars a day passing along Carbine Rd and the South-Eastern Highway."
Webb says the property's expected sale price of $4.5 million to $5 million is a smart investment for an astute buyer. "The price reflects a land value of between $400 to $450 per sq m and with a holding income based on $315,000 in rent, this is a return of between 6.3 per cent and 7 per cent. A new owner also has the option of creating extra income from the surplus land."
Mainzeal's facades business is based in a single-storey 1960s-built office and warehouse on 6215sq m at 51 Carbine Rd. Offices within the building have been extensively refurbished in the past year and are effectively new. They include a large open plan area at the southern side with a boardroom, manager's office and lunchroom at the northern end.
The concrete block warehouse, behind the offices, running parallel to the South-Eastern Highway, has two gabled bays of low to medium stud height, a 2m to 3m high concrete block base and glazed panelling above. Outside there are large areas of asphalt and concrete at the rear of the warehouse, which is security fenced around the perimeter to comply with MAF regulations. Part of this area is leased to nearby Lab Tests as extra parking.
Surrounding the development are other medium to large sized industrial properties built in the 1960s. Immediately next door is Coca-Cola Amatil and beyond that Lab Tests. Coca-Cola is looking at developing a bottling plant on its site.
Webb says the 5031sq m of vacant land is at the rear of the office/warehouse site on a separate title at 53 Carbine Rd. The land extends to the rail line directly opposite Sylvia Park station. "There were plans by Auckland Transport to build an overbridge from the rail station onto 53 Carbine Rd, but they have not seen the light of day."
The property is large and triangular, has an abandoned house on it and has been gravelled. "It is ripe for redevelopment," says Webb. "The entire property in its current state doesn't justify the cost of the land."