Epsom office is near the ‘medical mile’

5:00 AM Saturday August 27, 2016 Colin Taylor

An elevated view of 103-105 Great South Rd, Epsom, with property for sale identified by a red border.

A partially vacant office building close to Remuera’s ‘medical mile,’ is for sale for the first time in 33 years, with its Mixed Use and double Grammar School zoning also making it a prime candidate for conversion into high end apartments or an office refurbishment.

The property, which sits on 2076sq m of almost rectangular freehold land at 103-105 Great South Rd, Epsom, contains 1317sq m of office space over three levels and 34 on-site parking spaces. Council records show the building was built in 1983, and it has an A-Grade seismic rating.

“Only 28 per cent of this building is leased,” says Bruce Whillans of Whillans Realty Group who is marketing it, in conjunction with colleague Kathy Ying, for sale by tenders closing September 15.

Whillans says the property is in an area that rarely sees any commercial premises for sale at all because most commercial Epsom investments are tightly held.

“A lot of properties in the area are strata-titled so cannot be developed under multiple ownership and, just 500 metres north towards Newmarket, much of that property is leasehold. “This sale is quite a rare opportunity for someone who wants to acquire a freehold property in this area, whether they want to develop it or not,” Whillans says.

In terms of the property’s attraction as suburban offices, Whillans says 103-105 Great South Road is a very good proposition for an owner occupier who wants to be near the CBD and Newmarket, at affordable rental levels.

“As it is very close to the fully occupied, well known ‘medical mile’ strip along the bottom end of Remuera Rd, it would certainly suit a medical practitioner or any small and mid-sized professional firm,” he says.

“With Remuera Road now operating at full capacity, doctors and medical specialists are beginning to turn their attention towards the Epsom end of Great South Rd.

“Generally, the ability to secure full office floors is becoming harder to find in the current marketplace. These floors could be re-configured to accommodate multiple tenancies but the vacant space is ready to occupy as is.

“The property was purpose built in 1983 for an insurance company which has owned and occupied it ever since and for anyone looking to add value through a refurbishment, it’s ideally suited.”

Partly below street level, the main entrance to the property is from the first floor of the building on Great South Road. A flight of stairs at the Great South Rd entrance connects the first floor with the second floor.

Each office floor is configured around a central stairwell and service core which also contains separate male and female bathrooms.

All the office space is carpeted and partitioned and has an average stud height of 2.7m measured to the underside of the suspended ceiling tiles. The second floor has a reduced stud height of about 2.6m. The entire building is equipped with fire alarms and a fire sprinkler system.

“With limited commercial suburban development in the pipeline across Auckland and strong occupancy demand, suburban office vacancy rates have fallen from a high of 14 per cent in 2010 to 8 per cent today,” Whillans says.

Rental rates have subsequently risen along with this demand for space, with secondary suburban office space now leasing at an average of $240 per sq m - having recovered from their post global financial crisis lows of $190 per sq m in 2010.

“For refurbished, high quality B-Grade office space we are starting to see face-rents approach $330 per sq m. Meanwhile, new-build A-Grade suburban office face-rents are achieving $450 per sq m net.

“Combined with historically low funding costs and high levels of business confidence, we are seeing investors and owner-occupiers aggressively bid for well-located and well-built office assets.”

Ying says there are a number of options for the site and it will appeal to a variety of purchasers, including investors, owner-occupiers and developers, but the best use in the long run could well be in residential redevelopment.

“Arguably the highest and best use for this site would be to develop it into residential apartments, especially with the median house price in Epsom approaching $2 million. And with the Proposed Auckland Unitary Plan (PAUP) set to allow a maximum height of 16.5 metres for this property, the building in its current format, is under-developed.”

Ying says it is one of the largest mixed use land holdings in Epsom, and top end apartments targeting owner occupiers are in high demand. The nearby Alexandra Park apartment development, for instance, recently achieved over $220m in unconditional sales in just over 12 months.

One of the biggest drawcards, is that the office block is located at the centre of the highly sought after double Grammar zone. It is also within two kilometres of three other major schools, Dilworth Senior and Junior, Diocesan School for Girls and St Cuthbert’s College.

The property for sale is in an ideal location close to public transport with the Remuera railway station just 250m away. The typical commute time from the Remuera station to Britomart in the CBD is about 13 minutes. Motorway on-ramps are located at Gillies Avenue and the Greenlane roundabout, which are both about a one kilometre drive.

Ying says the property is within walking distance to the Market Rd village, close to Newmarket’s shops and surrounded by some of Auckland’s most affluent residential suburbs including Remuera, Epsom and Greenlane.

“In fact shopping centres, supermarkets, restaurants, hospitals, pools and fitness centres are all within a five minute drive, and there is ample space for outdoor recreational activities in the area within the parks and domains, including Cornwall Park and Mount Hobson Domain, all of which are within a three minute drive.”

Ying says Baby Boomers are cashing up their family homes and downsizing into apartments. “First home buyers are also driving the apartment market. For buyers looking for a home under $1 million close to the CBD and Newmarket, apartment living has become the only available option,” she says.

This is evident in the fact that the immediate vicinity has begun to see intensification already, with a number of apartment and town housing developments under construction. Several high end developments underway include the St Marks Apartments in Remuera, Alexandra Park apartments in Greenlane, The Edgerley and Hypatia in Newmarket and The Ivory in Epsom.

Mostly they are targeted at the owner occupier market and are selling for around $15,000 per sq m, Ying says. However, for top-end penthouse units, rates are closer to $20,000 per sq m.

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Bruce Whillans and Kathy Ying of Whillans Realty Group.