Unsold $200m+ Auckland commercial precinct: Why are buyers so reluctant?

Big key asset near motorway interchanges, 10km from Auckland CBD. Photo / Supplied

Around 2000 people work there, it's close to the motorway on and offramps, has 11 big buildings, solid international tenants and nearly 2000 car parks - so why isn't it sold after nearly a year?

That's the question some in the commercial property sector are asking after one of New Zealand's largest office parks remains unsold for months, despite strenuous marketing attempts.

Central Park in the Greenlane/Ellerslie area has offices for more than 2000 people spread across its 4.8ha 11-building $200 million-plus campus-style site, car parks often outside office front doors, near a train station and motorway access.

"Super-sized business park," went the marketing.

But super-sized interest rates and borrowing costs, difficulty getting access to capital, the pandemic, delays engaging consultants and shut borders are just some of the reasons cited for such a big asset not selling, those close to the deal say.

"If it had been two years ago, it would be gone by now," said one consultant who specialises in top-end sales like this.

James Molloy, transactions and syndicate sales manager at Oyster Group which owns Central Park with a partner, did not return calls about the sale.

Nor did Oyster's Mark Schiele.

On July 2, 2018, Oyster and global investment firm KKR said they had settled the Central Park purchase for $209m.

Oyster's chief executive Mark Schiele said the acquisition was consistent with his firm's strategy of partnering with appropriate capital at different points in the property cycle and adding value through asset management expertise.

The owners said they had improved the commercial hub: "When they took ownership, Central Park had an almost 20 per cent vacancy rate, which has been halved in the past three years.

The site has a stable and secure income profile, while there's also a number of future development opportunities," advertising said.

Four years later, McVay Real Estate and Colliers' Richard Kirke were advertising the precinct for sale, with expressions of interest closing on November 4 last year.

Central Park remains listed by Oyster Group under its office portfolio list. Oyster says it is a leading New Zealand commercial property and fund manager, with more than $2.1 billion in assets under management.

Central Park has undergone a transformation, is in a central location, had good transport connectivity and a new hospitality precinct, The Green, marketing for the sale last year said.

The 4.8ha site at 660 Great South Rd has more than 43,000sq m of commercial floor space, is near the Ellerslie train station and within 10km of Auckland's CBD.

Colgate, Bunnings, Estée Lauder and Waka Kotahi NZ Transport Agency are among the 63 office tenants, marketing said, also citing the vast 1700 car parks.

Kirke said last year buyers were still around.

"We still have strong offshore capital demand, despite New Zealand's border restrictions, and sites like Central Park that offer so much future growth potential with excellent green spaces are highly appealing to investors," he said then.

"While development is a likely step in Central Park's future for its owners, we can't rule out the attractiveness of the asset for investors.

"It is equally likely a passive or add-value investor will look to bank the attractive returns or investigate splitting up parcels of the site to potentially create additional value," he said last year.

Sector experts asked why people would buy such a big asset now when they might get it for less by waiting.

"There was a liquidity problem during the global financial crisis around 2008," one said.

"Something a bit like that is happening right now. Getting access to funds is the hard thing right now - and getting those funds at the right price. People are just sitting there. They might want to buy but they also think they're better off to wait and see what happens," the expert investor said.