Hotel loses out to redevelopment

By Bob Dey

Parnell landmark the White Heron Hotel has been sold for residential redevelopment of the site.

The hotel was opened in 1965 and was a trendy watering hole in the 1980s but lost custom during the cafe and boutique bar boom of the 90s.

Its owner for the past 10 years, the Japanese family-owned Okabe Enterprises, was beaten by objections in two attempts to upgrade the hotel and the 14,745 sq m property has become more valuable as a residential development prospect.

The difference between the two values is several million dollars, although the price tag on Okabe's sale to Queen City Group has not been disclosed.

Okabe bought the property and the hotel operation separately for a total of $12 million to $14 million, but without the ability to upgrade as it wanted, the value is probably about $10 million. As residential land, its value could be double that, depending on how heavily the site is developed.

Queen City principal John Williams says he does not contemplate site maximisation.

"Maximising site density may serve bottom-line purposes but would not be at all complimentary to this unique piece of real estate."

The White Heron perches on the cliff at the end of St Stephens Ave, above the Parnell Baths down on Tamaki Drive. Facing north and secluded from downtown Auckland, the hotel has substantial grounds and quickly gained a reputation as preferred accommodation for many visitors from the world of music and entertainment.

It has 57 rooms and, in 1967, had 11 neighbouring villas added to the property.

Gregory Rumpel of Jones Lang LaSalle Hotels, who worked with Okabe on the sale, says a changing accommodation environment was tough on the White Heron, especially as downtown serviced apartment numbers increased.

"That meant older hotels, particularly in non-CBD locations, have struggled to be competitive.
Accommodation facilities such as the White Heron require significant capital works to reposition themselves in what is now a very competitive market.

"By the end of 2000, Auckland's three to five-star room supply will have grown to 5500 rooms, a jump of about 85 per cent since 1995. This has been through a period when the Asian crisis, declining economic conditions on the local front and a volatile tourism market have impacted greatly on hotel performances throughout New Zealand."

Okabe will operate the hotel until the end of this year.

Williams plans a two-stage development, first removing the villas to build four blocks each with three apartments rising two storeys above the road.