Spec sale latest in big list for Mansons
An elevated view of 151 Victoria St, Buildings A & B anchored by NZME.
In the largest single office building transaction undertaken this year, Mansons TCLM has concluded the sale of the latest in a long line of big office properties the firm has developed on a speculative basis.
Announced earlier this week was the sale of Building A in an Auckland CBD two-building, complex at 151 Victoria St for $115,818,265.
Mansons also has two more large ‘spec’ building projects now underway in Sale St in Auckland city and in St Georges Bay Rd, Parnell.
In the latest sale, Augusta Funds Management unconditionally purchased the five green-star office property on the corner of Victoria St and Graham St in which media company NZME is the anchor tenant. In June Augusta will offer the public $70 million of equity in the building in the biggest syndication it has yet undertaken.
The sale was brokered on behalf of Mansons by Bayleys’ managing director Mike Bayley and senior agent Paul Hain in conjunction with John Green of Colliers International.
Hain also negotiated a 15-year lease over three floors of the six-level building with NZME which has merged its media operations into the complex including the New Zealand Herald, The Radio Network and digital operations like the daily deal website Grab One.
Other occupants of the 11,000sq m building are multinational wines and spirits company Pernod Ricard and Crown solicitors Meredith Connell which lease one floor each, on 10-year and 12-year terms respectively.
An interior view of 151 Victoria St depicting NZME offices.
Mansons will enter into a nine-year lease back of the only vacant floor remaining in the building, which means that Augusta will be purchasing a 100 per cent leased building on settlement.
Culum Manson, director of Mansons TCLM, says there is strong tenant interest in the last remaining floor and leasing negotiations are well advanced on this space.
Hain says the property has many attributes which make it ideal for syndication. “There is a long-term cash flow underpinned by a very long lease to NZME of about half the building; combined with strong rental growth by way of annual net rental increases of three per cent on all four leases in the building.
“As the developer, Manson’s TCLM has provided a 10-year full defects and capital expenditure warranty, meaning that Augusta will not be responsible for any further capital contributions to the building for the next decade.”
Building A has office floor areas of around 1850sq m and is connected with the smaller, adjoining Building B, which has floors of about 1350sq m, via a giant six-level, lobby atrium.
The two buildings were designed so they could accommodate separate self-contained tenancies. However, NZME, located on the first three floors, and Meredith Connell, on the top floor, have leased entire 3200sq m floors across both buildings which are connected above the ground floor by sky bridges and vertical feature stairs.
“The 20 metre high glass topped, fully enclosed lobby atrium is a particularly striking feature of the property flooding both buildings with natural light and providing an ideal meeting place for tenants and visitors,” says Hain. “The lobby also connects with a substantial and extensively landscaped public plaza area..”
An artist’s impression of office and retail building under construction at 46 Sale St, Auckland CBD.
Building A also has its own smaller internal six-level atrium to enhance natural light exposure. The building features a floor to ceiling stud height on the ground floor in excess of four metres, with the upper levels providing a stud height of 3.1 metres. This compares with 2.7 metres in a typical office floor.
“Combined with a floor-to-ceiling, glass curtain exterior façade, this design ensures that natural light penetrates deep into the office floors,” says Hain.
“In addition, the building’s five green-star rating means it offers significant energy savings for tenants as well as a healthy environment for staff to work in.
“In a world in which sustainability is of growing importance, green buildings are a way of reducing investment risk through improved liquidity, decreased obsolescence and better tenant retention prospects.”
Hain says the three main players in the market developing state-of-the-art, five green-star commercial buildings are Mansons, Goodman and Precinct.
“Precinct and Goodmans tend not to sell their buildings as they are key performing assets in their respective listed funds,” he says. “Mansons on the other hand ‘recycle’ their capital to continue on with their current strong construction growth curve. Because Mansons self-fund their own projects, they are the only developers that can commence these $100 million-plus buildings without any tenant pre commitment.”
Mansons TCLM is currently developing two similar sized five green-staroffice buildings also on a speculative basis,
The first at 46 Sale St is scheduled for completion in mid-2017. It has approximately 1200sq m of ground floor office and retail space, along with five upper floors of about 1700sq m - each with 100 on-site car parks. Mansons owns the Victoria Park Market car park and can offer up to 150 additional car parks in this building.
An artist’s concept of The St Georges Centre at 96 St Georges Bay Rd, Parnell.
Hain says the southern side of Sale St will undergo a major transformation with a number of old warehouse buildings being replaced by a mix of new office, retail, restaurant, bar and residential developments.
“The redevelopment of the old City Works Depot site on the corner of Sale St and Nelson St by Tournament Parking has provided the catalyst for the rejuvenation of this area. It’s popular with tenants because it’s handy to major motorway connections and is within easy walking distance of the centre of the city. The waterfront and Victoria Park are nearby as well..”
The second building, The St Georges Centre at 96 St Georges Bay Rd, Parnell, is scheduled for completion in late 2017. It will comprise 456sq m of ground floor retail space, including a cafe and four upper office floors ranging from 1800sq m to 2957sq m. The St Georges Centre will also have 178 on-site car parks and 77 cycle parks with adjoining shower and changing facilities.
A feature of the building will be a large central courtyard, located off the entranceway on the corner of St Georges Bay Rd and Garfield St.. Its perimeter will be glazed in the same curtain wall as the external facade and provide the premises with additional natural light and tenancy outlooks over the courtyard as well as the surrounding area.
Culum Manson says the company’s buildings are developed in response to feedback it gets from prospective tenants about the type of accommodation they are wanting.
“It’s all about efficiency, both in space use and running costs. Companies like having staff located on fewer, larger floors because it results in a more collegial and productive working environment. Bigger floor areas also mean less wasted space which also reduces operating expenses..
“We are sufficiently confident of demand for this type of space to be comfortable about undertaking these developments without substantial pre-commitment from tenants,” Manson says.
(From left to right) Paul Hain and Mike Bayley, of Bayleys, and Culum Manson of Mansons TCLM