A fully leased landmark North Shore commercial building occupied by the mental health management division of the Waitemata District Health Board and other large buildings on a hectare site, has been placed on the market .
The building at 44 Taharoto Rd, Takapuna, is a feature property in Bayleys' latest Total Property commercial and industrial portfolio which launches this weekend.
Comprising three titles on a 1.06 ha site, including Nos 1 and 9 Karaka St, the property is being offered as one lot by John Algie of Bayleys Auckland and Simon Aldridge of Bayleys North Shore who are selling it by deadline private treaty closing on July 4, unless it sells earlier by another process.
"This is one of the most weighty, bi-ticket opportunities outside of the Auckland CBD with a gutsy rent roll," Algie says.
He says it is located in the rapidly evolving "health hub" of Takapuna and consists of three commercial buildings with a total 5478 sq m of lettable space, dual street access and 251 car parks -- representing a one to 22 sq m car park ratio.
The WDHB, the country's largest district health board, is the anchor tenant in the property at 44 Taharoto Rd known as Waimarire House. HealthAlliance, the non-clinical service provider to the WDHB and Counties Manukau Health, occupies the 1478 sq m two-storeyed health Alliance House and several units in the office suite development to the rear of the site. Other tenants in the complex are My Remedy and Salvacare Biotechnologies.
The property as a whole generates $1,536,696 net a year plus GST and outgoings in rent with tenants on a weighted average lease term of about 3.56 years. Under the terms of their lease, WDHB is required to give two years' notice of lease renewal and there is an automatic 2 per cent annual rental increase built in to their lease.
Algie says the owners of the sizeable landholding and buildings wish to free up capital to pursue other projects.
"They have identified it as an opportune time to sell to allow a visionary purchaser to pursue options made even more attractive by projected activities including intensive residential development allowable under the Proposed Auckland Unitary Plan (PAUP)."
The strong tenant credentials make the property attractive "as is" and there is the potential to enhance returns from a portion of the property due to become vacant mid-next year.
"Buyers could be buoyed by the 2014 vacancy survey results released by Bayleys Research which shows the third consecutive year of office vacancy reduction, boding well for owners of good quality office stock," Algie says.
"There is also the lure of possible residential development in view of what is happening on the North Shore today." He says an open air car park to the rear of the site could be sub-divided off for development into medium-intensive density residential accommodation.
Under the PAUP, 44 Taharoto Rd is zoned Mixed Use which reflects the site as a transition area between residential and commercial zones with a range of possible building heights depending on context, while both Nos 1 and 9 Karaka St are zoned mixed housing urban.
"With so much talk in the media about the housing shortage in the Auckland region and forecast population growth expected to place unprecedented pressure on existing housing stock, developers are hard-pressed to find suitable land," says Algie.
"The North Shore population continues to romp away with 2013 Census data showing growth of 9 per cent on 2006 Census figures and 21.3 per cent growth on 2001 data. As a result of a mismatch between supply and demand, the residential property market on the North Shore has continued to excel in terms of sales volumes and median prices achieved.
"In the September 2013 quarter, the median sale price for a residential dwelling on the North Shore hit a record high of $715,000 -- 31.3 per cent higher than June 2011 when a bounce back was under way.
"With business confidence currently riding at levels not seen for many years and economic indicators in a favourable space, 'big ticket' offerings like Taharoto Rd look even more appealing to developers and to an investment market hungry for spec' built properties," Algie says.
"Taharoto Rd strategically links two of the North Shore's primary commercial zones -- Smales Farm to the north and Takapuna CBD to the south.
"The immediate area bordering Smales Farm has undergone significant commercialisation of its real estate over the past two decades -- particularly in the number of healthcare businesses which have sprung up in the near vicinity of Waimarire House.
"It is easy to envisage ongoing transformation of Taharoto Rd into a mixed-use corridor and Waimarire House could be at the centre of that growth."
Five-level Waimarire House with 3490 sq m of lettable area was one of the first multi-storey commercial blocks on the North Shore to be built outside of Takapuna CBD.
It was constructed in 1963 and has a ground floor foyer entrance with dual glazed automatic doors, terrazzo floor, reception area and large waiting area. Two lifts service the upper levels, from which there are impressive panoramic 360 degree views to Takapuna and Auckland City
The WDHB supports more than 560,000 people across the district with a staff of 6800 and an annual budget of more than $1 billion.
Adjacent healthAlliance House is understood to have been built as a workshop as part of the Power Board Depot site and was converted into offices around 1990. It now comprises a two-level office building with one lift and a total floor area of 1478 sq m.
There is a passing contract rental of $437,253 a year net plus GST and healthAlliance will vacate the property on June 30, 2015.
"This extended lead in time between sale and departure will allow a new owner time to secure a new tenant for the property or to start the ball rolling on any consents required to redevelop the building," Algie says.
"Units 1-8 at 9 Karaka St were created by the owners to optimise the income stream with minimal input and have a proven rental history. They generate around $154,800 a year in rent and offer smaller floor plate offices units ranging in size from 45 sq m to 101 sq m."