Chance to reach city high point

By Colin Taylor

A 15-level Auckland city ridge skyline building and its four-level neighbour are being sold as one lot or as separate properties.

"The two buildings at 8 Hereford St and 473-529 Karangahape Rd, known as The Plaza building, combine as a fine piece of real estate," said the managing director of CBRE New Zealand, Brent McGregor, who is marketing the freehold properties with colleagues Warren Hutt and Jonathan Ogg.

The buildings are being sold by deadline private treaty with a closing date of 4pm on November 8 unless they sell beforehand by negotiation.

The Hereford St building has 11 office levels and four car park floors. The Plaza building has two office levels, one car park level and a 12-shop retail level that extends for 89.6m along an entire block fronting K Rd.

"They are outstanding properties that are perfectly positioned with all the benefits of the central city and the advantages of having spacious car parks, large floor plates and high quality tenants," McGregor said.

"In a tightening office market, investors and owner-occupiers alike are always on the lookout for sound property opportunities that will continue into the future. These properties offer significant holding income and great potential to add value.

"Buildings of this size and nature don't often come on the market, so we are already receiving interest from high net worth investors and institutional investors including several inquiries from overseas investors."

The properties could be purchased together or separately.

"However, the combination of location, profile and potential for upside is hard to ignore. There is a good level of inquiry from larger occupiers in particular with the buildings being so close to the CBD but having the benefit of ample car parks and more cost-effective rentals."

Hutt, a senior director of CBRE New Zealand, said the two adjoining buildings had shared space linking their sites.

"The Hereford St tower is a visible major office asset and forms a recognisable part of the Auckland skyline, while The Plaza fronting K Rd has a mix of boutique retail shops and office accommodation."

Hutt said the high profile of the Hereford St property gave excellent naming rights for owner-occupiers or investors.

"The building can be seen from so many of the city's vantage points that any company having its brand on top of the building would achieve a major signage coup."

The Hereford St tower occupies a 5145sq m site on an elevated section of the street, and has 15,521sq m of lettable space.

"It suits corporate occupiers looking for large floor plates of between 980sq m and 2500sq m which is an increasingly sought-after property attribute for office tenants," Hutt said. "There are few office buildings with such large floor plates, particularly in Auckland's central business areas, so the Hereford St building is a very attractive proposition.

"The building also has 471 car parks below the main office floors which is a huge drawcard for large companies. Employees are always looking out for companies offering perks - and car parks are often the pick of the bunch."

The tower had been refurbished by Telecom in 2000 and had an A-grade seismic rating that added to its appeal as an investment property.

The Plaza building was "a recognisable feature of trendy K Rd".

Occupying 2846sq m, it has two levels of office space with a combined lettable area of just over 3760sq m, 935sq m of ground floor retail space and 34 secure car parks.

"It was built in the 1900s and refurbished in the 1980s so it offers heritage character with modern features," Hutt said.

"With its distinctive design and excellent frontage on to one of Auckland's busiest roads between the CBD and fashionable Ponsonby, The Plaza is well-suited to its boutique retail, convenience retail and office clients."

Both properties are zoned Business 8, allowing a wide range of activities.

Ogg, also a senior director of CBRE New Zealand, said the buildings were leased to quality tenants.

Auckland Council and VisionStream are the lead occupiers of 8 Hereford St, which has 100 per cent occupancy and a weighted average lease term of 2.45 years.

The council leases levels 4 to 11 and VisionStream is on levels 12 -15. Net passing annual income for the office accommodation and the car parks totals about $4.6 million excluding GST.

Fairfax New Zealand is the biggest office occupant of The Plaza, with 61 per cent net of the lettable area.

Other tenants include Global Visas, Sandfield Associates, Dean Murray & Partners, a cafe, and fashion, food, beauty and craft businesses.

Hutt said The Plaza generated net passing annual income of $1,056,735 excluding GST but including income from on-site car parks.

"With a weighted average leasing term of 2.9 years and occupancy by area of 98 per cent, The Plaza is in a strong position for upside growth and a repositioning of the retail mix."

McGregor said the CBD fringe location offered strategic and economic advantages for a purchaser.

"The properties sit at the busy western end of K Rd, straddling the popular areas of Ponsonby and Newton.The CBD is just over one kilometre away and Ponsonby Rd is only a 700m walk away - as is the big Vinegar Lane development formerly known as Soho Square.

"Significant residential development is under way in the area, and there are numerous public transport links in the immediate vicinity.

"Once the Auckland central rail loop is complete, a major train station on K Rd will create even better public transport access to the properties."

McGregor said on-ramps to the State Highway 1 and State Highway 16 (North Western) motorways were less than one kilometre away.

"Location and connection-wise, the properties are exceptionally well-placed for travel and ease of commuting for staff, office visitors, and shoppers.

"Add to that the amount of foot traffic and the 20,000 cars that pass the site each day, and this high profile and well-exposed site demands attention."

Hutt said vacancy rates in the city fringe had been consistently decreasing since 2011, reaching a five-year low in June this year, indicating rising demand for quality property outside the CBD area.

"There is incredible demand for well-located city fringe stock, with tenants constantly on the lookout for cost-efficiencies and development opportunities," he said.

"The overall volume of vacant space on K Rd has almost halved over the past year, which is another strong indicator of the stability of the outer city area.

"The current K Rd vacancy rate is less than the CBD average, demonstrating how lucrative the area is for operators looking for alternative space."

- NZ Herald

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