Old Pepsi building 'bargain buy' in coveted industrial location

By Colin Taylor

Landmark 1980s complex with loads of space in prime zone offers lots of options

The building's 11,788sq m of warehouse and office space is easily adaptable to manufacturing, freight or storage.
The building's 11,788sq m of warehouse and office space is easily adaptable to manufacturing, freight or storage.

A landmark Wiri industrial property generating market rate rent of $1.17 million annually and known locally as the old Pepsi building is being marketed through Savills with a number of options available for owner-occupiers, investors or developers.

"The original complex at 30 Ash Rd was regarded as spectacular at the time when it was built as a factory and warehouse complex for Pepsi in the late 1980s," says Savills' joint managing director Paddy Callesen.

He is marketing the property for sale by private treaty, closing on October 11, with Savills' senior broker Bruce Webb.

"It was one of the first buildings erected in Auckland with a high stud for a prestigious global tenant," Callesen says.

The beverage theme of the now privately owned 11,788sq m warehouse and office complex on a 2.23ha site has been carried on and it is now leased by Tasman Liquor.

Callesen says the liquor company has a 10-year lease expiring in December but has taken a year's extension on the "well presented property" to the end of 2014.

Built in 1987 and extended in 2004, the complex now carries about 10,300sq m of warehousing with a stud height of 8.27m at the portal knee, multiple roller doors and truck docks to the northern side.

It incorporates about 1500sq m of office space over two levels at the front of the warehouse, and a removable prefabricated building that has been used for inward and outward dispatch.

Callesen says the original warehouse has a truss-styled frame similar to the warehouse extension with two rows of steel supporting columns. It is fully equipped with fire sprinklers and is a regular shape allowing for ease of access for the storage of goods.

"The warehouse is easily adaptable to manufacturing, logistics, and freight or storage businesses," Callesen says.

"There are full-height windows to the Ash Rd office frontage and to the interior of the warehouse. The ground floor offices have an open reception area with boardrooms, meeting rooms, staff offices and a customer services office.

"Access to the first floor offices is by a flight of stairs and the area has a similar layout."

Callesen says the well landscaped property has less than 50 per cent site coverage and there is just over 2000sq m of development land to the northern road frontage, which is cobblestoned and used as surplus yard.

"The site has ample parking and manoeuvring space for trucks so the development of this area is a viable option," he says. "An added bonus is the coveted Business 6 zoning which is the city's most flexible industrial zoning.

"Business 6 zoned areas are a scarce resource of major importance because they are areas where potentially noxious business operations can be established with separation from sensitive activities."

Callesen says the property offers a number of options for a new owner. "It will appeal to owner-occupiers, investors and developers for different reasons.

"An owner-occupier can buy knowing there is no right of renewal on the existing tenant's one-year lease extension over the entire complex, however the liquor company has expressed interest in staying on in half the property.

"Investors, such as listed property trusts who have in-house tenants, could buy at a discount to replacement value and take a risk on reletting or a developer could purchase the property, negotiate with the existing tenant to stay on and take a leasing risk on the balance."

Callesen says any new owner will also realise they can get a bargain buy if they take the time to compare the cost of this property to a new design and build.

"Land costs are at $260 to $300 per square metre and development costs are in the region of $900 to $1000 per square metre, so anyone buying this site will get a substantial discount to replacement if they don't need new or near new buildings."

Webb says the complex has slightly too much office space, as was common in properties of this vintage. "Computerisation has changed the service industry over the past decade. Whereas a service business at one time might have had 10 marketers, they now have three as most of the ordering is done online, altering office requirements."

The property was bought by a private investor two years ago and the owner had decided industrial sites are not his forte and he would rather own inner-city property.

"The value of the property is well balanced between its land and improvements.

"It provides good-quality, attractive generic industrial accommodation where the possibility of ongoing and improving cash flow and development upside are a reality.

"Traditional property market fundamentals such as location, tenant covenant, quality improvements and long lease duration are still the most important investment criteria," Webb says.

Ash Rd is located in the well provisioned Wiri industrial area, the fastest growing industrial precinct in Auckland.

"It offers significant benefits as Auckland struggles with a limited supply of industrial land and this will protect the value of high-quality, well-located properties.

"Wiri has attracted a number of large industrial businesses, such as Frucor, Progressive Enterprises, Godfrey Hirst and Gough Gough & Hamer. More recently a number of specifically designed and built properties have sprung up following the opening of Goodman's M20 industrial estate and the launching of stage one of Euroclass' McLaughlins Rd estate."

Webb says the new motorway access routes and inland port have enhanced the desirability of Wiri as an industrial precinct. It is now the most sought-after location in South Auckland for big businesses needing large sites and direct access to transport infrastructure.

"Access to the State Highway 1 and 20 motorways linking to the Auckland airport and West Auckland has dramatically improved the area's ability to provide logistics and manufacturing companies with ready access in all directions."

- NZ Herald

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