Scheme planned with additional floors to be added - building now sold. Photo / supplied
Scheme planned with additional floors to be added - building now sold. Photo / supplied
Listed landlord Asset Plus has quit a vacant Auckland CBD office block along with plans for it to become a $350 million cornerstone asset.
Mark Francis, managing director of Centuria NZ- the manager of Asset Plus - announced the sale of the 12,000sq m multi-level building at 35 Graham St above Fanshawe St today to an unnamed party.
The company had planned to vastly expand the older building, adding floors to create an asset it said could eventually be worth around $350m.
Auckland Council had owned the building but leased it after Asset Plus bought it, with big plans for the transformation.
It was the council's service centre for some years and hundreds of staff worked there.
But Asset Plus struck a deal with the council to build a new northern council service centre at Munroe Lane, Albany. Workers had vacated the Graham St building some months ago to go to other council properties.
The ground floor of the building has more recently been used as a temporary vaccination centre while the rest of the building stands empty, with Asset Plus not getting any rent for it.
Francis didn't mention the previous scheme for the building today but said it had been sold for $65m.
"The transaction provides APL with future balance sheet certainty past the Munroe Lane development window, eliminates all leasing and development risk at 35 Graham Street, and mitigates any capital constraints for the company on the 35 Graham Street property," the statement said.
Plans for 35 Graham St - a property now sold. Photo / supplied
That is a big contrast to what the company said previously about the building.
Last year, Francis said plans for the office block were now back on after previously being ditched when the pandemic hit. Resource consent had been granted for the company to add three new levels on the existing office building, taking it from 12,900sq m to 25,800sq m, he said at the time.
The changes to create a statement building were designed by Woods Bagot.
The resource consent said the new building had been designed to cantilever over the category B listed BJ Ball building in a series of steps. That historic building has a distinctive mural on its wall which the council noted Asset Plus would retain.
The building straddles the end of Hardinge St and Graham St, opposite BDO House at 2 Graham St which Augusta syndicated in an offering to investors once it was completed in 2015 and leased to a range of tenants.
Francis said just last year there was strong demand for such space. The western flank of the CBD had developed in recent years and was now home to several "workhouse" businesses like Fonterra and Air New Zealand.
The redevelopment would bring cafes and eateries to the building's lower areas and decks off offices above, Francis said last February.
Pedestrianising Queen St might mean more businesses move out of the core CBD area and into areas like that western fringe, he predicted at that time.
Sam Gallaugher, Colliers International's commercial leasing director, said 2degrees, Meredith Connell and Fidelity Life had leased space in Mansons TCLM's new Fanshawe St project.
Kiwibank, Genesis and Trade Me had also moved into the area, he noted last year.
At its half-year result last year, Asset Plus said Colliers "are the master leasing agent and are actively pursuing all tenants with expiries or renewals within the forecast completion window for both the preferred development option, as well as the smaller scale refurbishment option".
The re-emergence of Covid had again subdued leasing activity and business confidence but however management "continue to look through the short-term impact of the virus, acknowledging that real estate is a long-term investment and the office plays an integral role in the large majority of companies' accommodation strategies", Asset plus said of 35 Graham St last November.
Internal soft strip-out and demolition works were set to commence in January this year, once Auckland Council and the vaccination centre move out in late December.
"This provides further time to secure leasing commitment before confirming a pathway forward. The preferred major redevelopment option will only be pursued with significant tenant pre-commitment," the company said in November.
Given market parameters and the recent impacts of the pandemic it was highly likely that a modest refurbishment of the existing building will be pursued, the company said then.
"This will likely be progressed in part, irrespective of any tenant pre-commitment. The council rent has dropped to around 50 per cent of the original rental level from June 28, 2021 for six months until the December 28, 2021 lease expiry," Asset Plus said last November.
