A building on O'Connell Street, Auckland. Photo / Supplied
Two fully-tenanted, character office buildings in the heart of central Auckland's premium fashion precinct are being marketed for sale by auction this month by Jason Seymour and John Green of Colliers International.
The buildings at 9 High St and 15-23 O'Connell St will go under the hammer on March 23, unless they are sold prior to the auction.
Seymour says the two buildings return more than $712,000 in total annual net rental income from a variety of retail and office tenants.
"High-quality investment opportunities in this part of the central business district have always been in short supply, with many properties owned by a relatively small group of investors," he says.
"These buildings represent some of the best character space in the central city, having been refurbished throughout to a very high standard and with the refits having preserved and enhanced many of the original features of the buildings.
"There is always high demand for investment property of this nature in central Auckland, and just as importantly, steady tenant demand for the type of contemporary character that these buildings offer small businesses."
Both properties comprise retail units on the lower street level with open plan, high-stud, character office floors above the shops. A feature of the seven-level 9 High St building, which contains 772sq m of net lettable space, is an attractive neoclassical facade. Eight tenants occupy one level each including the basement, which houses Emporio U, a second-hand designer clothing boutique. Mortimer Hirst Optometrists occupy 162 sq m on the ground and first levels. MC Capital Ltd, lawyer Peter Henry Nolan, Crane Brothers tailors, the Commercial Approvals Bureau, Harrison Stone Lawyers and Keith Berman Barrister occupy the upper level floors..
The tenants hold various lease terms which expire between March 2014 and October 2023, provided all rights of renewal are exercised. Combined net annual rent from all tenancies is $347,500 a year.
Care has been taken to highlight the attractive features of this historic building during the refurbishment, Green says. "Period features including sash windows, wrought-iron balusters, exposed beams and ductwork and wood floors make 9 High St a stunning CBD investment.
"The fully self-contained floor plates of around 90 sq m with their light and airy, contemporary fit-outs are perfect for smaller businesses and partnerships wanting the privacy and security of their own floor," he says.
15-23 O'Connell St is a four-level art deco building, containing 860 sq m of net lettable area, which was once occupied by the headquarters of the British Traders' Insurance Co.
The building is fully leased to seven tenants including Merlot restaurant and Karen Walker on the ground floor.
Strangely Normal tailors occupy a third ground floor retail tenancy while Beige Hairdresser, Ray White Real Estate, the Kiwi Deposit Building Society and media company Mitchell & Partners lease the upper floors, accessed from a dedicated lobby off O'Connell St.
Leases expire occur between May 2014 and October 2021, provided all rights of renewal are exercised, and net annual rental income amounts to $365,000 across all the tenancies.
"This building offers bags of character as well as outstanding, modern retail and office space.
"Exposed brickwork, ceiling beams and ductwork sit alongside modern kitchens and amenities," Green says.
Seymour says the properties' location in the heart of the Auckland CBD, together with their strong tenant mix, make them good passive investments within a popular, fashionable and tightly-held precinct.
"The floor plate sizes are ideal for the many small professional services, media and fashion industry firms which seek the prestige of a CBD location. The office space in these buildings should therefore always be relatively easy to let," he says.
"The diversity of income streams, paired with the opportunity for rental growth over the longer term, makes the two buildings solid buy-and-hold assets. We see them well suited to private investors or small syndicates looking to diversify their holdings through the purchase of quality commercial investments."
High St is one of Auckland central business district's prime fashion retail and commercial precincts, Green says.
"The immediate area hosts a range of New Zealand clothing designers and is a short walk from the restaurants and bars of Britomart, the Viaduct Harbour, the Sky Tower, Vector Arena and the Ferry Building. Britomart in particular has really revived this part of town, with the recent renovations of the Fort Street precinct cementing where the action is in the CBD."
The Auckland Art Gallery, Civic Theatre and Auckland Museum are also within easy reach.
Colliers International's national auction manager, John Bowring, anticipates the strongly-tenanted, quality character buildings will have broad appeal in the auction room. "We expect a lot of interest at auction due to the quality of the refits, the variety of income streams and desirable location of these character properties."