Two landmark properties on market

The 19-level AXA building in Shortland St has striking harbour and city views from its upper floors. Photo / Suppied

Two Auckland landmark properties worth a total of more than $100 million have come on to the commercial property market in one of the biggest sales campaigns of the year.

CB Richard Ellis is selling the AXA building at 41 Shortland St in the heart of the CBD and The Plaza shopping centre on Whangaparaoa Peninsula with expressions of interest closing on December 3.

AXA says it is selling "certain non-core assets" as there are improved signs of liquidity in terms of transactions.

Richard Horne, CBRE's senior managing director, is selling the properties alongside national director Bruce Whillans and Australian executive managing director Scott Gray-Spencer.

Horne says AXA is motivated to conclude a sale before Christmas and he describes the properties as "trophy commercial investments" that offer significant future development and repositioning potential.

"It might be possible to add an extra 14,000sq m to the standalone 17,300sq m AXA Building and there could be an opportunity to expand The Plaza.

"The AXA Building, in particular, will be one of the best repositioning opportunities when Auckland's commercial property market starts recovering. Most of the buildings along Shortland St are locked into listed and unlisted investment vehicles and the chance to buy a significant investment is a rarity."

Sitting on a 3200sq m site in the heart of the CBD's professional services hub, the AXA Building is a 19-level tower with a classic hotel-style lobby opening on to a set-back courtyard. It has a retail arcade, a four-level annex, six lifts and 103 carparks.

Low-lying development to the north and south of the property and an elevated position on Shortland St gives the upper levels of the building striking harbour and city views.

Whillans says Shortland St, recognised as Auckland's premier business address, has long been the epicentre for companies wanting prestige offices. Neighbouring landmark buildings include the Vero, Lumley and new Deloitte towers, housing some of the country's biggest blue chip tenants.

Built in 1978 on the corner of Shortland St and Fields Lane, the AXA Building underwent a sizeable upgrade in 1999 that included a new facade and plaza entrance designed by Peddle Thorp Architects.

In the past five years the owner has undertaken a capital works programme, including the refit of one floor and refurbishment of services and common areas.

A mix of legal, government and multi-national corporations tenant the building and include leading law practice Hesketh Henry, Department of Housing and Building and New Zealand Immigration Service.

"The average rents for the AXA building are less than the Vero, Lumley and PricewaterhouseCoopers towers," says Horne. "Net passing income from the property is more than $4 million.

"With an average weight lease term of 2.7 years across the office floors and 3.4 years for the retail space, a new owner could, through an aggressive leasing strategy, deliver significant upside.

"There are genuine backfill opportunities for space becoming vacant. Refurbished floors offer tenants an economical alternative without compromising on the prime Shortland St location."

Whillans say a new owner could also increase the tenancy profile and property's value. "Initial investigations show the permissible gross floor area of 13:1 under the Auckland City Council's District Plan has not been maximised and it could be possible to add an extra 14,000sq m through expansion of the podium levels and annex or creating additional floors if resource consent is granted."

While reluctant to put any price on the property, CBRE sold neighbouring Forsyth Barr Tower earlier this year for $41 million, which Whillans says shows the strength of Shortland St. "The AXA building has significantly more potential than its neighbour and demand is expected to reflect this."

The Plaza shopping centre is an equally desirable area. The sub-regional centre at 719 Whangaparaoa Rd dominates the peninsula and sits in a catchment area of more than 40,000 people.

The 19,600sq m four-level shopping centre on a site of about 31,130sq m is anchored by major retailers Foodtown, Farmers and The Warehouse covering 10,181sq m and has more than 50 specialty shops, including national brands Stirling Sports, Hannahs, Flight Centre, NZ Post, Whitcoulls, No1 Shoes, National and ANZ Banks. There are 705 on-site carparks. Net operating income is more than $4.1 million a year.

"As Whangaparaoa doesn't have a traditional town centre, The Plaza is the retail and commercial hub for the area," says Horne. "The 99 per cent occupancy rate for the centre and its weighted average lease expiry of four years gives surety of cashflow and a solid base from which to grow the centre's income."

Situated on a 13-kilometre peninsula with one road in and out, The Plaza has no direct competition and is the only sub-regional shopping centre for the area. It started trading in 1970 and has been refurbished and extended a couple of times since. The last major redevelopment was in 2003.

Within the primary catchment area, Statistics New Zealand figures show the income profile of people is higher than the Auckland, North Island and New Zealand national average. Under the Auckland Regional Growth Plan, Whangaparaoa Peninsula has been earmarked for infill housing, which will continue to underpin population growth.

Residential development on the peninsula is well on the way to adding 3000 new homes and 7500 residents.

Whillans says a new owner has plenty of room to expand the shopping centre and increase income as the area grows.

"The `town square' entrance has been remodelled. Adjoining vacant land zoned retail service could provide a new owner with the opportunity to expand The Plaza's floor space by creating new stores for a more efficient centre format."

Horne says opportunities to buy sub-regional shopping centres with a similar level of scale and development scope are few and far between in New Zealand. "The Plaza is a dominant and secure investment, with an established track record and trade demographics that are among the best in the country."