The property for at 75 Karangahape Rd, Auckland, is identified by a blue border. Photo / Supplied
A seven-storey commercial building on Karangahape Rd offers a sought-after Auckland CBD office location — with established educational providers as long-term tenants.
Colliers International is marketing 75 Karangahape Rd for sale by deadline private treaty closing April 4, unless sold earlier by negotiation.
Located on a prominent corner site in Auckland's education precinct, the property, which was constructed in 1988, earns net passing rent of $1.6m.
With fixed increases locked into the property's long-term leases, that income is forecast to rise to $1.8m by 2024, says the agency's capital markets director, Jason Seymour, who is marketing the property with colleague Blair Peterken.
"It's an ideal add-value investment property and a rare opportunity to acquire a sought-after Auckland CBD office investment at a time when vacancy rates remain at record lows," Seymour says. "With a weighted average lease term of nearly six years and fixed rental growth, investors can have a high degree of confidence in the property's performance over the long term.
"The tenants include two well-established tertiary education providers — Study Group and Alpha Educational Institute — as well as Wilson Parking, which leases the upper floor car park.
Seymour says the property has a net lettable area of 5684sq m on a 1540sq m freehold site.
The building also has 60 on-site car parking spaces in the basement and to the rear of the ground floor.
"This highly flexible property has typical floor plates of 900sq m, which allow the office floors to be split to suit a range of tenant requirements in the future," Seymour says.
"The floors receives good natural light from three elevations, and all floors have recently been upgraded to suit tenant requirements."
Peterken says the property is in a prominent position on the border of Auckland's CBD.
"The surrounding area is popularly known as the Learning Quarter due to its numerous student apartments, private tertiary providers, and closeness to two of New Zealand's top universities — AUT University and the University of Auckland, which has city and Grafton campuses nearby.
"In addition, Auckland Hospital and Starship plus the University of Auckland's medical faculty is a short walk away, across Grafton Bridge."
The property also has good access to the Auckland motorway network and CBD.
"It's within easy walking distance of Queen and Symonds Streets, and the Grafton train station is about 1.5km away."
Peterken says the main tenant is Study Group NZ Ltd — a major international educational provider founded in 1994 that is well established in the UK, Europe, USA, Canada, Australia and New Zealand.
"Study Group has occupied the property since 2002. Over that time, thousands of students have gained qualifications at Taylors College — Study Group's university foundation provider which is based in the building."
Peterken says Study Group leases part of the ground floor and all of Levels One, Two, Four and Xix. The company also has signage rights.
Study Group's leases account for 57 per cent of the property's total projected income with fixed 3 per cent annual rent increases.
At the end of the current lease obligation, Study Group will have been a tenant in the building for 23 years, with a five-year right of renewal option.
There are extensive "make good" obligations should Study Group decide to vacate the building, Peterken says.
Alpha Educational Institute (AEI) has occupied all of Level Five since the start of 2017.
"Established in Christchurch in 1995, AEI has delivered English Language programmes to thousands of international students over the years," says Peterken.
Wilson Parking leases all 27 parks in the upper floor car park, while Study Group and other tenants have leases in the basement car park.
Peterken says Wilson is New Zealand's largest car parking operator, with more than 285 car parking sites across New Zealand accommodating more than 30,000 cars per day. Its lease agreement, which extends until late 2024, allows up to 10 of the car parks to be removed from the lease pool if required by building tenants.
A small retail tenancy on the ground floor is leased to a cafe on a five-year term.
The property is zoned Business City Centre, making it suitable for a range of future redevelopment options in the longer term.
The zone permits the greatest height and intensity of development in Auckland, as well as a wide range of permitted uses including dwellings, visitor accommodation, entertainment facilities, offices, commercial services, conference facilities, retail, education and public amenities.