Popular Queen St building for sale

4:10 PM Saturday October 6, 2018 True Commercial

The 11-levels at 280 Queen St 9 (left) attract many office and retail tenants. Photo / Supplied

An opportunity to acquire a high-profile Auckland CBD property with add-value potential from the existing office and retail, has come to the market at 280 Queen St.

Colliers International and Barfoot & Thompson are joint sole agents to market the 14,690sq m freehold property for sale by deadline private treaty. Offers close at 4pm on November 8, unless it sells earlier.

The sales campaign is being jointly managed by John Goddard, Jason Seymour and Richard Kirke, of Colliers’ Capital Markets team with John Urlich and John Stringer, of Barfoot & Thompson’s Commercial Sales team. Goddard says it’s an opportunity to acquire a substantial freehold investment property on New Zealand’s premier street.

“Rarely are buildings of such scale offered for sale on Queen St. The property offers multiple income streams from 28 tenants, earning $4,658,044 plus GST in net annual rent. The comparatively short weighted average lease term provides an opportunity to reposition the property and add value through refurbishment or repositioning. Extremely low vacancy rates and high demand across all sectors suggest future residential, student or hotel accommodation use.”

Urlich says the property has frontages to both Queen St and Lorne St.

“Queen St benefits from foot traffic of more than 1.1 million people every month, the highest in the CBD; while Lorne Street’s ambience has improved as a result of new development and council-led improvements. The area is set to benefit from the City Rail Link. Upon completion, the nearby Aotea Station, Wellesley St, is expected to be the busiest station on the network. The surrounding area is considered Auckland’s cultural and civic heart, with amenities including the Auckland Art Gallery, the Central Library and the Aotea Centre. Parks, fashion shopping, dining, hotels, entertainment, and education facilities, including both of Auckland’s major universities, are all within a short distance.”

The property occupies a 2253sq m, T-shaped site with about 29m of frontage to Queen St and about 66m of frontage to Lorne St. It provides 11 levels of office space, three levels of retail, a top-floor apartment and secure off-street parking for 48 cars. A retail podium is split over two levels and from the large Queen St frontage escalators provide access to Lorne St, via the retail centre. The main car parking level is located above the retail podium, with access via ramps from Lorne St.

The office tower sits atop the retail and car parking levels. It is served by four elevators on the Lorne St side, which can also be accessed from Queen St via the retail escalators.

The building has 3343sq m of retail space and 11,347sq m of office accommodation, with typical office floor plates of 1033sq m.

“Retail tenants account for more than 40 per cent of the income. These tenancies are generally at or below market levels, providing plenty of opportunity for uplift.”

The successful retail centre has an established trading history, with strong tenant covenants provided by some of New Zealand’s best-known retailers.

JB Hi-Fi and Unichem Pharmacy are prominently located on the ground floor fronting Queen St.

The first level is occupied by a variety of tenants, including St Pierre’s Sushi, DML International, Seres Beauty and optometrists OPSM.

The second level, fronting Lorne St, is occupied by retail and medical tenants, including Labtests and 280 Radiology.

Some retail tenancies on this level, such as the popular Revive cafe and Lorne Street Larder, have wide frontages to Lorne St. These are directly opposite Khartoum Place – an attractive square that provides access to the Auckland Art Gallery and Albert Park via Kitchener St.

Office tenants include the Ministry of Business, Innovation and Employment (MBIE), NZX-listed Millennium and Copthorne Hotels NZ Ltd, the Ministry of Justice, and the Controller and Auditor-General.

Kirke says MBIE has recently exercised its right of renewal on three of its eight office levels in the building effective from January 1, 2019. MBIE elected not to renew its lease on the remaining five floors.

“The ministry’s pending partial departure would increase the building’s vacancy rate to 22 per cent. This provides an opportunity for a new owner to reposition a significant portion of the building. Auckland’s constrained property market has ensured strong demand for office space but there is also potential for mixed-use residential, commercial and hotel premises. It’s likely that part or all of 280 Queen St could be converted to residential or hotel use.

“The nearby proposed Aotea Station is likely to drive significant interest in this mid-town section of Queen St. The building’s naming rights remain unleased, which is also likely to be an attractive prospect for many.”

Stringer says 280 Queen St was developed in 1974 and expanded with an office addition in 1991.

“A significant refurbishment of the retail and office floors was completed in 2007 and further capital upgrades have continued. These upgrades have totalled $4,682,000 over the last decade, including air conditioning, lifts, access control, external repainting, stairwell lighting and replacement of the canopies on both street frontages.”

The property is fully equipped with fire sprinklers and has an emergency generator on the Level 3.

Zoned City Centre, permitted uses include: dwellings, visitor accommodation, entertainment facilities, offices, commercial services, conference facilities, retail, education and public amenities.