An Auckland CBD office property in the fast-developing Victoria Quarter is for sale with a three-year leaseback that would provide holding income for investors and developers looking to unlock the site's potential.
"This property's appeal comes down to location and opportunity," says Tony Allsop of Colliers International who, with fellow investment sales specialist, Jonathan Lynch, is marketing 25 Union St for sale by deadline private treaty closing at 4pm on Wednesday December 12, unless it sells earlier.
"Positioned on the city's fast-growing western fringe, the 1146sq m freehold site is within a growing precinct of high-quality apartment construction, with a City Centre zoning allowing for mixed-use office, retail and residential developments of up to a height of 40m - with volcanic viewshafts to Mount Eden," Allsop says.
He says the site houses a 1976sq m three-level commercial building with 57 on-site car parks.
"The property is offered for sale with a proposed three-year leaseback to the Newton College of Business and Technology. The lease will earn an estimated $622,000 to $678,000 in net annual passing income, including about $200,000 in car park rent if fully leased.
"A nine-month demolition and refurbishment clause in favour of the purchaser offers flexibility to upgrade the premises or completely redevelop the site.
"This is a chance to secure a CBD property in a prime growth location, leased to an established tertiary education provider, with passing income; and superb, long-term, add-value redevelopment potential," Allsop says.
"Located a short walk from upmarket Ponsonby and close to Wynyard Quarter, the property is ideally positioned for future residential development.
"The popular SugarTree apartments are located right next door, while the Union Green and Union & Co residential developments are within the same city block."
Built in the 1980s, the property has an A-plus seismic rating under the New Building Standard.
Allsop says the offices and both car park levels are fully equipped with fire sprinklers and air conditioning, with separate male and female toilet facilities on each level.
"The building has been substantially refurbished by the owners, who have spent $1.5 million upgrading the fit out and building services since acquiring the property.
"This includes including emergency lighting, partitions, floor coverings, ceiling systems, the air conditioning and fire sprinklers."
The ground floor features a 162sq m showroom with frontage to Union St and car parking to the rear. The remaining car parks are located on a basement level.
The first floor has 820sq m of office space with a 116sq m deck, while the second floor has 790sq m of office space and an 88sq m deck.
The property is on a rectangular site with about 18m of frontage to Union St; and is on a single title with a right of way that provides access to the basement car park, as well as the car park of the adjoining property at 23 Union St.
The overall building construction is of steel and concrete blocks, with external cladding of concrete blocks, plaster and glazing. A central stairwell and two lifts provide access throughout the building.
Lynch says the property's locality, on the western side of Auckland's CBD, has witnessed unprecedented growth over the past decade.
"Public and private sector investment in the area has resulted in major infrastructure and amenity improvements," he says.
"Ongoing investment will continue to reshape the precinct, with the City Rail Link and New Zealand International Convention Centre [NZICC] set to bring a new lease of life to the surrounding area."
Lynch says the property benefits from excellent transport links.
"It is less than 300m from the motorway interchange at the top of Hobson St, giving easy access to the Southern, Northern and Northwestern motorways.
"The site is almost directly opposite the intersection with Wellington St, which links to Freemans Bay and Ponsonby via the Wellington St motorway overpass and Franklin Rd.
"Two City Rail Link stations will be within walking distance upon completion, with the Karangahape Station located 750m south via Pitt St and the Aotea Station about 1.5km to the northeast."
Lynch says City Centre zoning under the Auckland Unitary Plan permits a wide range of activities and the greatest intensity of development in Auckland.
"The City Centre zone sits at the top of the hierarchy and plays a pivotal role in Auckland's present and future success. This zoning aims to ensure Auckland continues to be an international centre by accommodating for learning, innovation, entertainment, culture and urban living."
Significant ongoing residential development in the area include:
• SugarTree, a mixed-use apartment, retail, entertainment and workspace complex spanning several sites between Union and Nelson Sts. The first stage is located directly next to the property for sale, while the second stage is located to the north. The third stage is under construction by Nelson St.
• Union & Co, a boutique residential development under construction on a nearby site at 15-17 Union St. The project was designed by award-winning architects The Leuschke Group and is being developed by New Zealand's largest apartment developer, Conrad Properties Group.
• Union Green, a terraced housing and apartment complex being developed by Myland Partners at 39 Union St. Construction is due to recommence with new contractors following Ebert Construction's receivership earlier this year.
• Grace Victoria Quarter, a 10-level apartment building located on a gateway site cornering Sale and Cook Sts. The project is a collaboration between Auckland-based Reside and award-winning Melbourne-based developer Little Projects. Completion is due mid next year.
Allsop says the wider Victoria Quarter area is also undergoing significant non-residential development.
"One successful example of urban renewal is the City Works Depot, a block from the property for sale on Cook Street," Allsop says.
"The former Auckland Council workshops have been transformed into an industrial-inspired retail and office development occupied by trendy boutiques, cafes and creative businesses."
Allsop says a new Sudima Hotel with up to 200 rooms, a gym, rooftop bar, and separate restaurant and bar is under development at the corner of Wellesley and Nelson St, opposite the New Zealand International Convention Centre which is expected to open over the summer of 2019/2020.
On Hobson St, the Auckland City Mission's premises are being demolished to allow development of the new nine-level Mission HomeGround building.
Designed by award-winning architects, Stevens Lawson, the 12,500sq m centre will be a leading-edge health and social services hub. Completion is due in mid to late 2020.