La Quinta Wyndham at Ellerslie has risen above the Penrose motorway onramp/offramps. Photo / Safari Group
A new American hotel brand with a Spanish name, La Quinta, made its Auckland debut this week opening operations from a purpose-built 12-level 274-unit $140 million hotel, apartment and office project near the Penrose motorway onramp.
One of the world’s biggest accommodation chains, Wyndham Hotels & Resorts, will operate La Quinta Wyndham from the new block at 20 Park Ave, Ellerslie.
Simon Taylor, a director of Graham St-headquartered Safari Group, said that business developed, owned and now managed under a franchise agreement the new 171-apartment building with 103 hotel suites. Simon is brother of Damien Taylor who has been featured in Herald publicity about Safari previously.
All up, the new Ellerslie block has 171 residential apartments as well as 103 accommodation suites for La Quinta guests, with eight commercial units and a cafe.
Safari has sold 85 per cent of the project as unit titles to investors.
Taylor said around 145 of the 171 residential units are owned by private investors. In some cases, they’ll live in their units but in other cases, they will rent them out to tenants, he said.
The hotel opened on Monday.
Safari this week released a time-lapse video showing how the block was built, from ground preparation and foundations to finishing the top floor and opening it.
American business Wyndham bought the La Quinta brand, said to be named after hearing a rancher describe “La Quintas” which are Mexican estates with a big house surrounded by small cottages or casitas.
The New Jersey-headquartered chain’s name is now on the Ellerslie block.
From Monday this week, Safari began operating the hotel under its franchise arrangement with the Americans, Taylor said.
La Quinta by Wyndham Ellerslie Auckland is the twelfth hotel Safari Group has developed and launched with Wyndham.
It is the fifth Wyndham property that Safari Hotels will manage, joining Ramada by Wyndham Queenstown Central, La Quinta by Wyndham Remarkables Park Queenstown, Ramada Suites by Wyndham Christchurch City and TRYP by Wyndham Wellington Tory Street.
Some other Ramada hotel rooms have been used for Covid quarantine while others have been used as initial homes for 501 deportees from Australia.
All up, Safari owned by the Taylor and Neil families has built 13 New Zealand hotels, from Albany to Queenstown.
The business has been running for 25 years and was named after a Nissan Safari which was in the car park outside the accountants at the time a name was chosen.
“More new hotels are in the pipeline,” Taylor said, citing a new $90 million Parnell hotel and apartments now under construction on the corner of The Strand and Augustus Tce. Another new $50m hotel project was being designed for Palmerston North on the old Post Office site. A third hotel worth about $40m was planned for the Kapiti Coast on Marine Pde.
“There’s another couple of projects bubbling away and I won’t mention those due to sensitivities. Why the growth? We’ve been pretty bullish about the NZ market. In the last six months, things have started to come right. We can see the cost of construction trending down. On our sales side, we’ve sold 42 residential units this year. That’s nothing to turn your nose up at. Our product still represents good value in the marketplace. That’s why we’re fairly bullish. We’re only one of a handful of developers doing the mid to highrise construction. We’ve specialised and stayed in that sector. We’re boxing on.”
Safari opened the $100 million 48-apartment 83-hotel room Ramada Newmarket in 2021. That is right beside the Southern Motorway at the Newmarket offramp.
The Ellerslie site had been a car park and was owned by syndicator Oyster Capital which also owns the neighbouring and surrounding Central Park.
Taylor said the site was extremely challenging to work on.
Beneath the land Safari bought is a huge stormwater tank which has to remain in place and is part of the Watercare system. An open void is below the tank to deal with stormwater in the area.
Water from there goes into the stormwater mains but Safari had to build above it.
People worked beneath that tank, strengthening the existing structure.
In the video at the start on the top left, you can see large steel beams being placed on top of the tank to allow piling rigs to work through that tank space which is a dirt ground catchment area rather than a sealed tank.
The piling rigs were placed on steal beams above that void. Foundations were driven into the rock below. Just under 100 piles went down more than 10m below the ground surface. That work alone took five months alone.
A tower crane was erected at the centre of the site and once piling was complete, verticle steel beam columns rose to form the structure of the building, coming up off the piles drilled into the rocks below.
A steel or tray decking system was installed and concrete slabs were poured on top of those. The core was then built to allow for four elevators or the core in the centre of the building.
The structure is a relaxed shaped V in terms of its layout.
The video then shows a new angle and the steel structures and slab pour continuing upwards.
Then a unitised curtain wall facade system is installed. That is a double-glazed structure with argon gas between the glass panes to ensure very little acoustic transference from the motorway. In some sections, the building is treble-glazing. Allwin Facades made that system, Taylor said.
The tower crane was dismantled in August this year. Taylor said an intense fitout phase started a year ago, once the facade began to be applied.
“As soon as we have two levels up on the facade, that’s enough to allow us to get into the fitout and install the Elephant Plasterboard,” Taylor said, adding that none of Fletcher Building’s Gib board was used. “We’ve always used that product so we’ve been unaffected by the shortages in that sector in the last few years.”
Taylor said Safari was still advertising 30 apartments and 50 hotel rooms for sale. The apartment studios start from $399,000 and two-bedroom apartments are $765,000.
The hotel units start from $250,000 and have a commercial lease of 15 years to the hotel. Investors get 10 days of free hotel accommodation a year.
Safari is projecting a 6.5 per cent gross return. Investors pay for body corporate costs and rates, Taylor said today.
Three years ago, the Herald reported how some investors hoping for incomes had returns cut from such investments when occupancy plummeted. Two major New Zealand hotel chains slashed payments to investors who own suites at properties throughout the country, blaming Covid-19 for reduced occupancies.
Nine of 11 Ramada properties cut payments in 2020, drawing an outcry from investors who never expected their incomes to halve. Meanwhile, 70 per cent of Quest landlords were not being paid in full.
Sajad Bassam - a director of Marsden Group which pays licence fees to Ramada and Wyndham to use those brands in this country - said the business managed about 600 rooms, and had to cut returns at nine of 11 properties due to plummeting occupancy when Covid broke out. Mike Osborne of Marsden said in 2020 that occupancy rates fell from 77 per cent to 4 per cent.
One investor said the monthly rental income of $2600 dropped to just over $800. That investor had expected “guaranteed” returns from their sale and purchase contracts, with rents forecast to rise by about 2 per cent annually.
Simon Taylor indicated today demand was strong from investors.
The situation was very different to three years ago when the pandemic hit.
Investors buying into Safari properties now were getting payments above bank interest rates as well as other benefits, including capital gain in popular tourist locations, managed by a national chain with a global franchise arrangement to an American giant.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
Hotels in Auckland, Rotorua, Wellington, Christchurch and Queenstown are to be sold.