For sale: City office block with resident jjimjilbang

5:00 AM Saturday January 31, 2015 Colin Taylor

Plenty of parking is an added attraction for the Hobson St office floor

A freehold Auckland city office floor fully leased to two tenants and producing net annual rental income of $270,841 is among a wide range of investment properties that will go under the hammer on March 4 as part of Bayleys’ first Greater Auckland portfolio auction for the year.

The 994 sq m strata titled Unit F at 51 Hobson Street comprises the upper floor of the two-level building located just north of the Victoria Street intersection.

“This is a high yield CBD investment opportunity with diversified cash flow and potential redevelopment upside in the future,” says Damien Bullick of Bayleys Auckland office who is marketing the property with colleague Alan Haydock.

Bullick says the floor is part of a building that dates back to the 1950s but was fully refurbished and redeveloped in 2001. It now provides five ground floor retail tenancies, upper level offices and basement car parking

The ground floor space is anchored by longstanding Italian Restaurant La Porchetta on its Hobson Street frontage, with the rear units being occupied by two Asian food outlets, a superette and a liquor store.

The first floor has been split into two tenancies, the largest of which encompasses 624 sq m. Bullick says its tenant, Gold Coast Health Spa, established in the building in 2010 a Korean health spa known as a jjimjilbang - which literally translated means ‘heated bathrooms’. The spa has recently renewed its lease for a further six years, with one six year right of renewal.

He says that in Seoul, families spend hours and sometimes days at mega-spa complexes which usually house public baths, saunas, massage rooms and areas for lounging, sleeping, dining and even playrooms for children Though not on the same scale as the jjimjilbangs in Korea, facilities at Gold Coast include a public bath, sauna, a traditional Korean steam room which uses heated stones, and TV rooms. Clients, both Korean and Kiwi, are offered a traditional jjimjilbang experience.

The other tenancy of 330 sq m is leased to Megaweb Auckland Limited, a 24 hour internet café that has been in occupation since July 2010 on a six year lease which has two six-year rights of renewal. Both tenancies have their own separate entranceways off Vogel Lane, a service lane extending along the southern side of the site and which connects Hobson Street to Nelson Street further to the west.

“One of the key strengths of this investment property is the plentiful car parking, with 23 secure basement car parks coming with the property, 13 of which are leased to Gold Coast Health Spa with the remainder leased on a six-year term to a neighbouring business owner,” says Bullick. “This is an unusually high number of parks for a property of this size. It increases the floor’s appeal to tenants and, down the track, possibly an owner occupier, because it means there is plenty of parking for both staff and clients which is increasingly hard to come by in the CBD.

“It also enhances the floor’s residential redevelopment potential longer term because car parking is an important consideration when it comes to conversions.”

Haydock says the property is located in an area of the central city that has undergone extensive redevelopment in the past two decades and is home to a significant and growing residential population.

“The surrounding area now comprises a combination of traditional retail and office buildings along with a large number of residential apartment developments. Increasingly, we are seeing a mix of uses in one property, with residential intermingled with commercial activities, which appears to be something the council is encouraging as part of its aim to make Auckland one of the world’s most livable cities.

“The property is also in a very central position within the CBD offering handy access to motorways and being within easy walking distance of Queen Street, the Britomart transport and ferry terminals and the waterfront,” Haydock says.