Auckland CBD landmark evokes 1920s Chicago

7:01 PM Friday September 29, 2017 True Commercial

The General Building stands at the corner of Shortland and O’Connell Sts, in the legal and financial precinct. Photo / Supplied

Brokers are describing the General Building, which is now for sale in Auckland’s CBD, as the best heritage office tower in town.

Dating from 1928, the property is being jointly marketed by Colliers International capital markets director Richard Kirke and JLL director of sales and leasing John Binning.

The beautiful example of the 1920s Chicago school of architecture, at the corner of Shortland and O’Connell Streets, is for sale by a deadline private treaty process — closing October 25, unless sold earlier.

The brokers point out that revenue-wise, the fully tenanted property has continuously outperformed the market for more than a decade.

“There’s little doubt this superbly located, premium building is the very best heritage office tower in the city,” claims Binning.

“Located a stone’s throw from Queen and High Streets, in the legal and financial precinct, the General Building remains as architecturally stunning as the day it was built.

“With its beautiful facade and vibrant, character offices, it is among the best examples of early 20th century ‘Chicago-style’ architecture in New Zealand.

“The building has been maintained to a very high standard, with modern office fit-outs sympathetic to the character of the building.”

Kirke says the building’s sheer beauty is complemented by its strength as an investment.

“The General Building has stood the test of time from a pure investment standpoint,” he adds.

“From 2004 until today, the property’s compound annual growth rate has been 9.4 per cent, which outperforms the market and bears testimony to how well designed this 1928 building is. Even during the global financial crisis, the property’s income increased.”

Kirke says there is potential for the new owner to grow the $2,180,000 annual rent.

“The General Building is fully occupied but is currently under-rented,” he says. “With a relatively short average lease term of 2.6 years and a high number of long-term tenants, there is a good opportunity for income growth at rent review time.”

Kirke says the building also offers add-value and change of use opportunities.

“Given the changing nature of Auckland and the city’s accommodation pressures, we are expecting interest from both residential developers and hoteliers,” he says.

“There is also an opportunity to redevelop the 103sq m courtyard in the building’s southeast corner.

“A creative owner could consider converting it into additional office, residential or hospitality space.”

The building was constructed for the Yorkshire Insurance Company, built with fine and ornamental detail at their request.

Binning says the Chicago-style architecture, ornate lobby and exterior detailing make it ‘revered’ as a heritage office building.

“Chicago-style buildings are typified by their steel frame construction, large windows in a grid configuration, and limited ornamentation – all of which the General Building displays.”

The 10-level building is on a 771sq m site with a gross floor area of 6770sq m and a net lettable area of 5486.5sq m.

“With typical 578sq m floorplates, the spaces can be easily split into one to four tenancies capable of accommodating five to 60 people,” Binning says.

“The property also has a good New Building Standard rating, having undergone seismic strengthening work a few years ago.”

The building has been home to some of New Zealand’s finest legal minds, and still has many legal practices among its 31 tenancies, Binning says.

“Its ongoing popularity amongst barristers and solicitors is due in part to its closeness to both the High Court and Auckland District Court.”

Office tenants include New Zealand Asset Management and Richmond Chambers.

The General Building also has two retail tenancies occupied by high-end men’s clothing retailer Working Style and the well-regarded Wine Chambers restaurant.

Kirke says the Shortland St precinct is home to some of Auckland’s premium office towers, including the Vero and Lumley Centres.

“Amenities in the area include retail stores, restaurants and the Britomart bus and train station.

“The property is also within easy walking distance to the ferry terminal, Viaduct Harbour and Wynyard Quarter.”

The General Building is for sale at a time when quality Auckland offices remain strongly in demand.

Colliers International’s latest annual CBD Office Report found vacancy rates remain low while rents are continuing to rise.

Research and Consulting National Director Alan McMahon says rental growth comes despite new stock taking some of the pressure off.

“The tightness in the CBD office market has led to average net effective rents rising to $425 per sq m in the prime sector, up 5.5 per cent on the previous year.”

JLL associate director of research and consulting Tom Barclay says the office sector continues to move through a strong growth period.

“Office assets are in high demand in Auckland’s CBD, with a number of high profile properties selling earlier this year to offshore parties,” says Barclay.

“While office yields sit at historic low points, current rates are still attractive to international investors on a comparative basis to other gateway cities in the Asia Pacific region.”