Big sales symbolise Parnell’s resurgence
This refurbished four level office building at 86 Parnell Rd sold for $8.625 million
The sale of two office buildings along Parnell Road for a combined total of nearly $19.9 million is indicative of Parnell as a re-emerging city fringe market, says Henry Thompson, investment broker for Whillans Realty Group.
“Parnell is once again becoming one of Auckland’s most sought after retail and commercial precincts and these two big transactions are evidence of Parnell’s resurging and active status,” Thompson says.
“Traditionally Parnell commercial property has been very tightly held and its buildings changed hands rarely. Also many of Parnell’s properties had become a bit rundown. However, in 2015 this started changing and this resurgence has since gained momentum.
“Some of New Zealand’s top property investors and developers which previously sold out of the suburb are now coming back into that market and this interest is being driven by the major public and private works currently underway.”
In relation to the latest big sales Thompson says one was an extensively refurbished four level office building which was seismically upgraded to 100 per cent of new building standard (NBS) at 86 Parnell Rd. Having ground floor retail and parking for six cars it sold for $8.625 million.
“It is fully leased and generates $643,456 per annum in rent. The property occupies a 556 sq m site and sold for an equivalent to an initial yield of 7.46 per cent or $4736 per square metre.”
Thompson says the property sale was on seven contiguous freehold unit titles. “This unit-title structure provides the new owners with the flexibility and the potential to add further value through a residential conversion or sell down of the individual office floors.”
He says the property was completely stripped back to a concrete shell in 2008 and the refurbishment included new exterior glazing, a total refit of the internal office and retail space and a full replacement of the buildings services.
The second building sold by Whillans Realty is a high profile office building on the corner of Parnell Rd and Scarborough Lane at 272 Parnell Rd, which fetched $11.25 million - reflecting the equivalent of a 7 per cent yield on the fully leased net income.
Built in the 1970s, the property at 272 Parnell Rd comprises 2924 square metres of net lettable area across four levels of office, ground floor retail and a lower basement level.
The basement level is used as an auction room by the International Art Centre which also occupies the ground floor.
The property includes 28 car parks which are on two basement levels and is accessed from Scarborough Lane.
Analysed on a rate per square metre the sale was equivalent to $3877 per sq m, Thompson says.
The property was purchased by property investors Vantage Group, headed by Justin Wyborn. In the past 18 months, Vantage has acquired two other Parnell properties including 46-56 Parnell Rd and 99-115 The Strand.
Thompson believes the 2012 redevelopment of Michael Friedlander’s six green star Geyer Building at 100 Parnell Rd marked a turning point for the precinct.
The four level office building at 272 Parnell Rd, sold for $11.250 million.
“The suburb reached its high point in the eighties and nineties but then fell into disfavour as developers and investors looked elsewhere.
“Now other property players with big plans for Parnell include Mansons TCLM which has announced plans to demolish an existing two level warehouse and showroom building at 96 St Georges Bay Rd and build a $100 million, 12,000 square metre office block with 240 car parks.
“Last year, Wellington-based retirement village operator Summerset purchased a 2.3 hectare block of land from KiwiRail directly adjacent to the new Parnell Train Station. While Summerset has not released its plans for the site, the additional retail spend generated from several hundred residents will be a boost for the precinct,” Thompson says.
In another uplift for Parnell, brothers Ross and Ken Healy along with Terry Gould of Phillimore Properties have purchased the Textile Centre on the corner of Kenwyn Street and St Georges Bay Rd. “They have plans to eventually refurbish the 13,800 square metre property and create something similar to their Imperial Lane development on Queen Street.”
Thompson says Parnell is following the same trend seen in Ponsonby in the past couple of years, where one significant development not only changed the pedestrian count, but also acted as a catalyst for other developers to refurbish and redevelop older, tired buildings to create dynamic precincts for retail and hospitality tenants.
“The catalyst for change in Ponsonby, in my mind was the construction of Ponsonby Central which has been a runaway success. Other developers have since moved in.”
He says a good example of Parnell following the Ponsonby trend is the opening of Mark Wallbank’s restaurant Woodpecker Hill in what was known as the old Bog tavern next to Heards Park. “The popularity of this outstanding restaurant has blazed the trail for smaller restaurants and bars to seek out space.”
In the public infrastructure arena, which will make Parnell more accessible to commuters, earthworks for the new $7.6 million dollar Parnell Train Station began in April 2015 and the platforms were completed in November 2015.
“Auckland Transport predicts that this station will become one of the city’s busiest, with 2000 passengers set to disembark in the peak hours of 7 am to 9 am every business day,” says Thompson.
Henry Thompson, Whillans Realty.