Grandstand views with many add-value options
The four-storey 4841sq m complex at 35 Graham St has a high profile above busy Fanshawe St. Photo / Supplied
A well-known Victoria Quarter office property is for sale and is expected to tempt purchasers with its Auckland City harbour views and potential for add-value development.
Set on an elevated 4841sq m freehold site and fully occupied by Auckland Council — 35 Graham St is to be sold by expressions of interest, closing at 4pm, March 14.
The property is being marketed by CBRE agents Brent McGregor, Mark Maginness and John Holmes, who says it has a high-profile grandstand position above busy Fanshawe St.
McGregor says the Victoria Quarter has become home to multiple office developments for the likes of Spark and NZME in recent years.
“The regenerated Wynyard Quarter precinct below has also attracted investors and occupiers including commercial tenants like Fonterra, Datacom and Air New Zealand,” he says.
McGregor says the Graham St property “takes pride of place” on the edge of Auckland’s original foreshore.
“It supports a four-storey office building constructed in 1997 which incorporates the original foundations; and a small area of supporting heritage structure and mosaic artwork of the BJ Ball building that was previously on the site.
“Large rectangular floor plates of up to 3439sq m, allow tenants to improve efficiencies and reduce costs. They can split floors to satisfy leasing demand. The building’s central core conveniently divides the floors into East and West wings, while atriums in each wing provide excellent natural light to all floors.”
McGregor says an A-grade seismic rating will also attract corporate tenants.
Generating annual rent of $3,975,000 plus GST, the complex is 100 per cent occupied by Auckland Council and a leaseback agreement forms part of the sale and purchase agreement.
McGregor notes that a two-year lease provides investors or developers with the opportunity to plan for future repositioning or redevelopment while receiving strong holding income.
“Whether as a hotel, apartments, or new office building, the location, views and underlying land zoning present multiple possibilities to add-value.
"The opportunities include refurbishing office space to achieve greater rental growth, as well as the potential to add up-to a further 8588 sq m of gross floor area (GFA).
"With 12,515sq m of net letabble area and 2525sq m used for storage, this space could be converted to around 76 car parks.”
Development-wise, maximum total floor-area-ratio controls sit between 14,523sq m GFA and 19,364sq m, providing significant future potential.
Holmes says the property will benefit from ongoing investment into infrastructure and commercial projects, including a new linear park along Victoria St and the $3.4 billion City Rail Link, the country's largest ever infrastructure project.
He says the new transport connection and added public amenities enhance the property’s value as office space, at a time when there is no shortage of demand.
“Being near to the new $700m New Zealand International Convention Centre, which is less than 1km away, will also heighten its prospects as an attractive investor asset,” Holmes says.
“With international visitor arrivals increasing by more than 840,000 over the past five years, at an annual average growth of 7.6 per cent, 35 Graham St also offers potential as a future hotel site, filling an obvious need in Auckland’s booming hotel market.
“All hotel segments are achieving record occupancy levels in excess of 80 per cent with an overall market average of 83.7 per cent in the 12 months to September 2018. All segments are also achieving record average daily rates (ADRs) with a current market average ADR of $210, an increase of 2 per cent on the previous year.”
Meanwhile, says Maginness, a growing owner-occupier market in Auckland CBD, plus a low level of residential apartment supply coming to market, has reduced unsold stock.
“This means there is a good pre-sale take-up for apartments in the CBD, where at any one time around 80 per cent of the pipeline is pre-sold. With Auckland being one of the fastest growing cities in the Asia-Pacific region, we’re experiencing unprecedented demand for apartments and high-quality office properties.
“However, 35 Graham St is in a class of its own, due to security of income; the generous size of both the site and building; and its ability to add floor area to create a large-scale mixed-use development.”