Big Central Park vacant site for sale

1:40 AM Saturday March 16, 2019 Colin Taylor

The 1.3ha of vacant land used for car parking borders the Southern Motorway. Photo / Supplied

A big, high-profile development site, currently used for parking, is for sale within Auckland’s Central Park business precinct at Ellerslie.

The 1.35ha freehold property, titled as Lot 15, 660 Great South Rd – is for sale by way of offers closing at 4pm on Wednesday April 10, unless it sells earlier.

Located in the heart of Auckland’s Southern Corridor, running from Newmarket to Ellerslie, the 6.2ha business park was purchased last year by Oyster Property Group in a joint venture with global investment firm KKR.

The $209m transaction, brokered by Colliers International’s Capital Markets team, is the single largest metropolitan office deal in Auckland to date; and the Oyster/KKR joint venture has now appointed the agency to market 1.35ha of surplus land at the northern boundary.

Richard Kirke, International Director of Capital Markets at Colliers says the land is no longer required with Oyster/KKR focusing on the active management of Central Park’s office assets.

Kirke says the sale represents a superb opportunity for developers, investors and land bankers to acquire a strategic freehold site with significant potential.

“It has many options with a Business Park zoning, good holding income and profile to New Zealand’s busiest stretch of road. The site has 285m of frontage to the Southern Motorway section of State Highway 1 with exposure to an average of 200,000 passing vehicles a day.

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The freehold development lot is indicated by a blue border. Photo / Supplied

“It is also well-served by public transport, with regular buses along Great South Rd and trains every 10 minutes at peak times via Ellerslie Train Station, only two minutes’ walk away.

“The zoning allows for substantial development flexibility, along with potential for alternative uses if a new purchaser wishes to pursue a zone change.”

Kirke says it’s a chance for purchasers to leverage off the success of the wider Central Park business precinct.

“Central Park is a premium corporate office precinct that accommodates more than 60 businesses and 2100 employees across 11 buildings, spanning a total area of 44,000sq m.

“Key tenants include Genesis Energy, Restaurant Brands, Mars, Toshiba, George Weston Foods, the Bunnings head office and Salmat.”

Gareth Fraser, Auckland Director of Investment Sales at Colliers, says Central Park has excellent accessibility.

“Traffic lights at the entrance provide quick access to the Auckland motorway network, via the nearby Ellerslie interchange. The precinct is only a seven-minute drive to Sylvia Park, a 10-minute drive to Auckland CBD and a 20-minute drive to Auckland International Airport.”

Fraser says Central Park’s extensive amenities, including an on-site childcare centre, cafe and convenience food retailers.

Since Oyster took over management in July 2018, an additional 9000sq m of space has been leased.

In addition, Oyster is investing in an extensive improvement programme to revitalise the business park.

“The precinct will become more accessible with co-working space to be added, new landscaping and footpaths, pedestrian-oriented shared spaces, enhanced signage, end of trip facilities and electric vehicle chargers,” Fraser says.

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Central Park accommodates over 60 businesses in 11 buildings. Photo / Supplied

“It will also become more of a social space, with on-site group fitness and yoga classes, and the establishment of a new activation space to accommodate pop-ups, barbeques and other events.

“The existing retail offerings will also be complemented by a new Chinese yum cha restaurant and food trucks.”

Peter Herdson, National Director of Capital Markets at Colliers, says the site’s Business Park zoning allows for intensive office development as well as some ancillary services such as gyms and retail.

“There is strong tenant demand for office space in Auckland but a shortage of supply, especially as the vacancy rates in both the CBD and metropolitan areas like Greenlane remain at historical lows.

“Net supply is static as the development pipeline keeps pace with ongoing stock reductions from refurbishments and conversions.”

Colliers International research shows that, of the 1.7m sq m of metropolitan office space across Auckland, only 114,000sq m is available – a vacancy rate of just 6.7 per cent, well below a two-decade average of 8.5 per cent.

Herdson says less than a fifth of that vacant space is in prime office developments.

“With high demand and low vacancy, tenants will likely face higher rent rises over the next few years, of between 3 to 4 per cent per annum.

“There will be greater total returns from higher rents and firming yields in a bullish investment environment spurred on by low interest rates and strong offshore investor interest.

“These conditions make it an ideal time to embark on a new office development in Ellerslie.”

Herdson says there could also be scope for a purchaser to apply for a zone change to allow for a medium-density residential development on the site.

“The land’s closeness to transport and significant amenity, including the Ellerslie town centre, makes it ideal for pushing out the envelope of the existing Ellerslie residential area.”

Herdson says Auckland’s median residential sale price has entered a more stable and controlled period of growth over the past 18 months.

“However, there is still an imbalance between demand and supply, especially for metropolitan Auckland developments close to transport options, good schooling, hospitals, airports and employment hubs.

“The site for sale ticks all of these boxes,” Herdson says.