The $40 million sale of the Federal St Car Park Building has achieved one of the highest price per-square-metre rates ever recorded in the Auckland CBD.
SKYCITY Entertainment Group Limited recently announced it had sold the freehold property, at 65-71 Federal St, to Australian property group ICD Property Investment Ltd.
The transaction was brokered by Colliers International's capital markets team, represented by Peter Herdson and Jason Seymour.
Set on a substantial 1641sq m freehold site with Business City Centre zoning, the property comprises a purpose-built, 11,487sq m car parking building with 427 spaces over seven levels.
Herdson says the sale price equated to a rate of $24,375 per sq m of land.
"This is an outstanding result. By comparison, high-profile apartment and hotel development sites in Auckland's CBD have recently sold for $20,000 to $22,500 per sq m."
Seymour says in analysing the sale on a per car park basis it equated to $93,677.
"What's remarkable is that the property was sold with vacant possession, with no holding income from any of the 427 car parks.
"The sale price is a testament to the property's superb location. It is close to the SKYCITY entertainment precinct as well as CBD offices, apartments and transport links.
"The property is also within walking distance of two of Auckland's most important development projects — the New Zealand International Convention Centre (NZICC) and the City Rail Link's Aotea Station, both of which are under construction nearby."
Purchaser ICD Property Investment has been responsible for a number of large residential development projects in Melbourne, including Eq Tower — a 633-apartment, 65-floor apartment building in the heart of the CBD.
The company recently expanded into the Sydney market with plans to develop the airspace above the 120-year-old City Tattersalls Club. The plan involves a tower including a public gym, a hotel of about 100 rooms, and some 267 apartments.
ICD has not yet announced its plans for the Federal Street Car Park site.
However, Seymour says the property has obvious potential as a hotel or apartment redevelopment site.
"It is surrounded by numerous restaurants, eateries, theatres, hotels and conference venues.
"The site's generous zoning allows for much greater density than the existing building, which means it could readily be redeveloped for commercial, hotel or residential use.
"New Zealand's ongoing tourism boom and the $703 million NZICC and Hobson Street Hotel investment make the property particularly appealing as a future hotel redevelopment site.
"As New Zealand's main international gateway, Auckland boasts one of the strongest hotel markets in the Asia Pacific region. The NZICC will further increase demand for rooms."
Herdson says the sale to an Australian company reflects the recent trend towards increased international investment in prime New Zealand properties.
Colliers recently analysed the last three years of commercial property transactions in New Zealand with a value of $50 million and over.
The analysis found domestic investment declined in value by 77 per cent between 2015 to 2016, from $1.75 billion to $400 million.
Of the 18 commercial property sales over $50 million last year, domestic capital accounted for only 22.5 per cent of the transactions by value.
The leading source of capital was Asia (35.1 per cent), followed by global funds (31.0 per cent) and Australia (11.4 per cent).
SKYCITY has owned the Federal Street Car Park building since 2004, but new parking facilities in the nearby NZICC have made it surplus to requirements.
The building has resource consent for 317 long-stay and commuter car parks and 118 short-term visitor spaces.