Investors keen to add shopping to mix

An aerial view of mid-Queen St near the Town Hall. Photo / Supplied

In a clear indication the Auckland property investment market is picking up a head of steam again, Bayleys Real Estate has concluded $80 million worth of office building sales in the precinct since the beginning of the year.

The deals include properties at the southern end of Queen St with most of the sales being concentrated within a city block opposite the Aotea Centre and the Auckland Town Hall.

The three largest sales totalling over $50 million involved the 3292sq m former Methodist Mission site at 360-370 Queen St, a 20-level office building at 396 Queen St and another office building at 350 Queen St. These properties were sold to separate purchasers by Colin McKenna and John Algie, Bayleys Auckland.

Equity Growth Trust, part of the Conrad Properties Group, bought the big freehold block of land at 360-370 Queen St and 3-15 and 17 Wakefield St with frontage also on to Airedale St. The redevelopment of the property will see about 60 retail outlets up to 74sq m in size established on the former Methodist chapel building site on the corner of Queen St and Airedale St, opposite the town hall.

The retail units are being offered for sale off the plans on individual titles, at prices that range from $185,000 to $785,000 through Millie Liang of Bayleys Auckland. Liang says the offering has met with a strong response from the market with 52 having already sold, predominantly to owner-occupiers. The development, to be known as Queens Court, is due to open at the end of 2012 and will include a 96-seat food hall.

Conrad Properties Group director Jamie Hutchens says the longer-term plan for the site, once the retail site is operational, includes the construction of a multi-storey 360 unit residential apartment block between Wakefield St and Airedale St. Part of the site, a 10-level office building at 360 Queen St, on the corner with Wakefield St, has subsequently been sold to a Korean education provider by Richard Yang of Bayleys Auckland.

The property at 396 Queen St, on the corner with Mayoral Drive, comprises a 9552sq m office tower on a 1470sq m site and was bought by an Auckland investment syndicate. McKenna says the building will be substantially redeveloped at street level with a stronger retail focus. The 550sq m office floors on the upper 15 levels are home to national and international companies and government agencies and provide wide ranging harbour and CBD views. The building also has parking for 89 cars.

At 350 Queen St, which was purchased by a private investment company, McKenna says work is well advanced on reconfiguring the ground floor into more intensive retail use with a food stall and convenience retail theme, with Flight Centre remaining an anchor tenant. Upper level tenants in the nine-storey building, on the corner of Lorne St, include Auckland University of Technology (AUT) and legal firm Holmden Horrocks.

McKenna says while most of the focus on redevelopment of the CBD has been concentrated on what is happening near the waterfront, there is a significant revitalisation occurring in the Aotea precinct.

"Some of this is being driven by a pick-up in the education sector which has been steadily gathering momentum again over the past year or so. This means there are an increasing number of students studying, and in many cases living, in this part of the CBD. This is also attracting retailers, particularly those targeting the 18 to 25-year-old consumer, as well as food and beverage providers."

Algie says the area is also undergoing rejuvenation as part of the council's plans to further develop an arts, culture and entertainment hub in the Aotea Quarter. This includes a $100 million revitalisation of Aotea Square encompassing repair of the underground carpark roof and a redesign of the square and the front of the Aotea Centre. The new Q Theatre at the rear of the Town Hall will open in September as will the redeveloped Auckland Art Gallery in nearby Kitchener St.

At the rear of the former Methodist Mission site, the Duthie Whyte building, at 120 Mayoral Drive, has also sold for $12,000,000 at a 9.5 per cent yield through Geoff Graham and Bill Fenton of Bayleys Auckland and Peta Laery, Bayleys Manukau.

Offered for sale for the first time since it was built in the late 1980s, it comprises 4940sq m of fully leased office space on a high-profile 1172 sq m corner site which also has frontage to Wakefield and Airedale Sts.

"It was purchased as a long-term passive investment by a private Auckland investor who was attracted by the opportunity to purchase a medium-sized central city office tower offering a good standard of business accommodation, at realistic current market rental rates, as well as generous carparking," says Graham.

The nine-storey structure has two basement parking areas, with 61 carparks, and six levels of office accommodation. Tenants include AUT, Open Polytechnic, the Serious Fraud Office, the Methodist Mission and legal firm Duthie Whyte.

Selling further along Queen St, near the corner with Karangahape Rd, was a six-level commercial building at 520 Queen St. The mid-1980s built 4757sq m complex has large office floors of close to 1000sq m, plus 58 carparks on level one. Located on 1745sq m of land, it sold at a 10.2 per cent yield through Cameron Melhuish and Alan Haydock of Bayleys Auckland.

It is leased to retail, education and office tenants.