A century ago, the area around Victoria Park was the not-so-salubrious, industrial hub of central Auckland.
What is now Victoria Park Market housed the municipal rubbish incinerator and alongside it was the municipal abattoir. Neighbouring buildings to the south were mostly similarly grimy industrial premises.
Fast forward 100 years or so and the area — renamed Victoria Quarter — has emerged as one of the most desirable and sought after commercial locations in Auckland's CBD, says Bayleys' Alan Haydock.
Haydock, who manages city & fringe sales and leasing, is a big fan of the Victoria Quarter.
He says contemporary architecture, which stands beside beautifully restored historic warehouses set in narrow streets and lanes, gives the area the charm and character.
"Fortuitously, the Victoria Quarter rises gently up from the reclaimed land below, with the elevation providing many buildings with panoramic, north facing views over the greenery of Victoria Park and the harbour."
Haydock says Victoria Quarter neighbours other popular commercial precincts such as Wynyard Quarter and Viaduct Harbour which connect with the waterfront and also close at hand are large-scale CBD amenity areas such as the City Works Depot, Victoria Park Market, the SkyCity complex and the soon-to-be-completed Commercial Bay development.
"Victoria Quarter includes, or is close to, many of the best shops, bars, restaurants, cafes, supermarkets and office buildings that Auckland has to offer. A special amalgamation of amenities and closeness to motorway access, as well as excellent public transport, are what makes Victoria Quarter so appealing to businesses and residents alike," says Haydock.
"The evolution of Victoria Quarter really started to gather pace following Mansons TCLM's development of Spark's four-building campus at Victoria St West and other new buildings around it including the BDO Centre in which NZME is the largest tenant. There has also been a flurry of recent commercial and residential development activity along Sales St, with a major catalyst for that being the redevelopment of the old Auckland City Council workshops on Sales St's intersection with Nelson St."
Sale St buildings recently completed or under construction include AA Insurance's new headquarters, developed by Mansons; Grace, a 10-storey luxury apartment building being developed by Location Group; Sales Street Residences,14 upmarket three-bedroom apartments designed by Jasmax; and Vocus House office building.
The strong tenant demand for refurbished character and contemporary office premises in the area has pushed up net rental rates, with $400-$525 per sq m now being consistently achieved for quality, well presented premises, says Haydock.
"The wave of new development and refurbishment activity in the Victoria Quarter has also generated substantial investment interest which has translated into record sales prices and very competitive yields," Haydock says.
Bayleys City & Fringe team has recently sold three buildings in Drake St for a total value of close to $12m:
• 20 Drake St: a 461sq m standalone character brick warehouse building, previously converted to a luxury apartment but currently office accommodation, was sold for $5,425,000 at a 4.2 per cent yield by Alan Haydock and Damien Bullick. Located on a small 240sq m corner site, it has a nine-year office lease until the end of 2025. "The building has been immaculately refurbished, upgraded and seismically strengthened, with the antique wooden floors and exposed brick walls and beams creating an authentic, historical backdrop to the otherwise modern interior," says Haydock. "The tender closing date for this property was bought forward after strong initial interest resulted in the vendor receiving an offer they were prepared to accept."
• Level 1, 30 Drake St: a contemporary 279sq m office floor with three car parks sold by Alan Haydock for $3.25m at a 5 per cent yield and $10,750 per sq m (excluding carparks). Its award winning fit-out was designed by architect Fearon Hay. Features include concrete polished floors, floor to ceiling glazing with views over Victoria Park and a multi-media system that controls fully automated lighting, music and audio-visual systems. It was sold with a one-year lease back to the vendor who currently occupies the premises.
• 37 Drake St: a 573 sq m former brick warehouse building, providing a high standard of boutique office accommodation, was sold for $3.15m at 6.37 per cent yield by Cameron Melhuish and Matt Gordon. Previously occupied by The Matador bar and restaurant, the premises has recently been converted into character office space with a new six-year lease from April 2018. A bar area on the lower ground floor which flows out on to a sunny balcony has been retained as a staff lunchroom and break-out area.
These transactions followed the sales late last year by Bayleys City & Fringe team of two nearby adjoining character buildings at 13 Sales St (vacant office accommodation) and 2A-2D Vernon St (boutique apartments). These were sold to separate purchasers at a total value of $6.4m.
Haydock says strong demand from investors, owner occupiers and tenants for property in the Victoria Quarter shows no sign of abating. "This exceptional fringe CBD location will only become more desirable as Auckland City continuous to grow. We always have interested buyers, many based overseas, who are waiting for their opportunity to get a foothold in this tightly held area. This coupled with the limited number of properties for sale or lease at any one time should also contribute to continued upward pressure on rentals and prices."