CapitalGroup buys capital’s Willeston Centre
16-level Willeston Centre in Wellington’s CBD. Photo / Supplied
Three vacant office levels are available to lease in the landmark 16-level Willeston Centre in Wellington’s CBD following its sale to Auckland-based private equity business CapitalGroup Limited.
The complex sale, for an undisclosed price until after settlement, was on behalf of 11 separate owners of the tower block, which is situated in a prime location at 22-28 Willeston St; and was concluded by Colliers Wellington managing director Richard Findlay and investment sales broker Hamish Templeton.
Findlay says the penthouse office floor on level 14 is currently vacant, along with levels two and three.
“Discussions are underway with potential occupiers to fill the space,” he says.
“We’re in advanced discussions with tenants looking at the available space and we’re expecting it to be leased quickly now the building has been taken over by CapitalGroup.”
Given the extremely short supply of office space in central Wellington, the change of ownership means the three vacant office levels in the building are now likely to be considered highly attractive among corporate occupiers, Findlay says.
“Following the November 2016 earthquake, there is virtually no vacancy in Wellington CBD offices. The sale of the Willeston Centre offers a rare option for businesses to secure well-presented office space on the city’s Golden Mile. This property is in a prime location, has an A-grade seismic rating and has space available now that’s ready for businesses to move into.”
Templeton says the building occupies a substantial 1684sq m site bordered by Customhouse Quay, Willeston St and Victoria St. It is located on the intersection of Willis St, Lambton Quay and Customhouse Quay, which is one of the busiest corners in the Wellington core retail and office precinct, he says.
“This building is in a highly desirable location right in the middle of Wellington’s corporate and retail hub. The upper floors have stunning harbour views and it is also seismically sound, having been upgraded to A-grade standard in 2017.”
The building has a total of 11,350sq m of office and retail space, split between lower-level podium floors on the Customhouse Quay corner and tower levels on the Victoria St corner.
Among the 20-plus tenants are NZIER, H2R Consulting, Cisco, Hewlett Packard, The Nursing Council, Levi Strauss and Two Degrees Mobile.
Findlay says the sales transaction was completed following the agency’s identification of the building as an add-value opportunity in a prime location and having the potential to capture high-profile tenants competing for extremely limited amount of vacant office space in Wellington CBD.
The brokers then presented the building to CapitalGroup as an opportunity to make a valuable investment in the Wellington market.
Findlay says the building’s sale has resulted in the ownership of a unit-titled property, held by multiple individuals and investment groups, being consolidated into the hands of a single corporate entity with a sound track record as a commercial property investor.
“This is a huge advantage when it comes to leasing. We know from years of working with local and national corporate occupiers that a single owner, rather than a body corporate, is vastly preferable from the tenants’ perspectives,” he says.
Templeton says aligning the interests of multiple owners and facilitating the sale to CapitalGroup presented a significant challenge.
“This is definitely one of the more complex and time-consuming sales our office has been involved in. Nobody thought it would be possible to co-ordinate all 11 owners to sell at the same time. However, we knew that with CapitalGroup’s track record in restructuring assets to meet tenant demand, this was a strong opportunity for them.”
The purchase of the Willeston Centre is CapitalGroup’s first foray into the Wellington commercial office market, with most of its investment portfolio in Auckland. The group viewed the property as a compelling opportunity to meet the extremely high demand for quality office space in central Wellington, Templeton says.
“Very few investment opportunities of this scale are available in the Wellington CBD, where large assets are tightly held especially in the current environment where the scarcity of office space is placing upward pressure on rents.”
The limited availability of comparable add-value opportunities in Auckland at an acceptable yield level was a further factor which prompted the group to pursue a Wellington acquisition, says Greig Allison, director of CapitalGroup.
“The Willeston Centre presented CapitalGroup with the type of opportunity that is rarely available in the main centres – to convert a quality asset in a prime location into a highly desirable offering for tenants looking to relocate to seismically-sound buildings. This is a sweet spot in the Wellington market which only a small number of buyers have the opportunity to access.”
Richard Findlay and Hamish Templeton, Colliers International