A redevelopment site is up for sale at 15-17 Union St within an Auckland city fringe precinct that is experiencing a new phase of transformation.
"This property is on the market for the first time in 20 years," says Tony Allsop of Colliers International who, with colleague Mark Wyness, is selling it by deadline private treaty closing July 24 unless it sells earlier.
Featured in Colliers' latest New Zealand Portfolio publication the property encompasses a 1780sq m elevated site on two titles with extensive street frontage.
"It is located just around the corner from the new Sugar Tree apartment and retail complex under construction on Nelson St," Allsop says.
"This property offers a large scale development site with an excellent position in Victoria Quarter, which is benefiting from a great deal of redevelopment and improvement.
"It is fully tenanted, with holding income of $290,748 per annum from two tenants, two billboards and a large car park that takes up to 40 vehicles.
Similar land parcels in the CBD are being swallowed up and this one won't last long on the market either."
The property at 15-17 Union St comprises two low-rise buildings with 15 Union St tenanted by the House of Rugby, a popular bar, restaurant and cafe that opened just before the Rugby World Cup in 2011. It features grandstands around a mock rugby field where fans sit to watch the games on the big screen TVs. The other building is tenanted by FredCo Motors, an established auto service company.
"A variety in lease terms and expiry dates offers flexibility, and presents an opportunity for a new owner to review the mix in consultation with the tenants," says Allsop. "The multiple and diverse tenancy uses will provide a solid income stream while a buyer considers long-term plans for the site.
"There is significant value in this property associated with the stunning vistas that could be available from a residential tower on this site. A developer may well choose to build apartments to take advantage of these site lines; however, a mixed use development with retail or office space on the ground level would also be appropriate.
"Union St is ripe for redevelopment and it's only a matter of time before the entire street is rebuilt with a mix of commercial and apartment buildings," Allsop says.
"Redevelopment activity in this area is really picking up. Recently a tenanted investment property at 23 Union St, on a slightly larger site, sold for more than $6 million.
"Only a short distance away, CBD land values have rocketed to unprecedented levels. A number of key development sites that have been sitting on the market for a long time, have sold at rates of $10,000 to $13,000sq m of land area. This is indicative of very strong investor and developer confidence in the market, on the back of Auckland's economic growth.."
He says one of the best indicators of the way the district will develop in the future is the new $250 million Sugar Tree apartment development which broke ground in August last year. Situated between Union and Nelson Sts, the project when complete will comprise three towers with a total of 495 apartments forming a "micro-community" with some retail services for the associated residences.
Wyness says the Victoria Quarter is revitalising and is well-positioned for housing intensification due to being close to the CBD. "A buyer has the added benefits of the area's revitalisation, including last year's completion of the redevelopment of the Victoria Markets and the City Works Depot," he says.
"Victoria Quarter represents the western part of the Central Auckland business district, bounded by Hobson St, Fanshawe St, Union St and Victoria Park. The Quarter is formed around a northwest facing basin rising from Victoria Park to the Hobson St and Union St ridgelines. This natural topography and orientation provides views to and from the Waitemata Harbour, the Harbour Bridge, Victoria Park and has good access to sunlight..
Wyness says the zoning in Victoria Quarter allows a great deal of flexibility in usage.
"The property can be redeveloped as retail, office space, residential or mixed use," he says.
"Developers, land bankers or investors with an eye for future potential will be very interested in this site, overlooking the fashionable suburbs of Ponsonby and Freeman's Bay with the potential for beautiful elevated views to the northwest," Allsop says.
Allsop says it is a great time to buy into a fringe CBD district. "There's a good level of income on this site, and because of the way such sites are being soaked up, a buyer could either redevelop it now or land bank it."