Prime Wynyard Quarter opportunity

12:28 PM Thursday July 24, 2014 Colin Taylor

An entire city block of prime freehold land within the rapidly developing Wynyard Quarter harbour precinct has been placed on the market for sale with concept plans showing that four mixed use buildings of more than 45,000sq m could be built on the site.

Colliers International has been appointed to sell nearly one hectare of land on behalf of Viaduct Harbour Holdings Ltd with offers closing on July 24.

The property is featured in Colliers' latest New Zealand Portfolio which launches today and is being marketed for sale by John Green with colleagues Peter Herdson and Andrew Reed.

Viaduct Harbour Holdings acquired the property, which has the addresses 121-135 Beaumont St and 184-200 Pakenham Street West, from the Ports of Auckland in 1996.

The block is bounded by Beaumont St, Gaunt St, Daldy St and Pakenham Street West.

Green says four buildings occupy the site on short-term leases with demolition consents in place ready for redevelopment.

"This is an exceptional opportunity to acquire a freehold development site within the Wynyard Quarter and Viaduct Harbour area with the site totalling 9793sq m and having four street frontages," says Green.

"Short-term leases are in place providing holding income of $614,138 per annum.

"A redevelopment of this property would be well timed to coincide with the next phase of the revitalisation of Wynyard Quarter precinct by Waterfront Auckland and it would result in beautiful public spaces adjacent a mixed use commercial and residential development on this site."

Green says redevelopment could begin within a short time frame with only three leases over the whole property which are either short term or include the demolition clauses.

"The majority of the property is subject to one of the leases which can be terminated at any time with nine months' notice. The other two terminate in October 2016 -- one with six months' notice -- giving the new owner a clean slate to commence building," he says.

Several one and two-storey buildings are on the site along with a concrete area fronting Daldy St which has been used for parking.

"Several of the tenants are well-established retailers in the area and it is possible they would be interested in resuming operations on-site once new buildings are constructed," Green says.

He says the land has become available at a time of remarkable change for Wynyard Quarter on Auckland's waterfront.

"The first stage of a massive master planned redevelopment was The Jellicoe Precinct, a $96 million project completed in 2011 which won several international and national awards and proved popular with the public, drawing over a million visitors in the first year alone.

"Waterfront Auckland redeveloped the North Wharf incorporating the original cargo shed to create a vibrant waterfront edge lined with restaurants and landscaped walkways. The precinct was linked to the Viaduct and CBD beyond via the Wynyard Quarter Crossing, a pedestrian bridge that lifts in two sections to allow boats to enter and exit Viaduct Harbour."

Herdson says Waterfront Auckland has committed a further $285 million in additional expenditure over the next 10 years in infrastructure and seed capital.

"Waterfront Auckland's continued works in the area bordering the Beaumont block property for sale are a big attraction for investors," he says.

"Waterfront Auckland and Auckland Transport are building a new 20- metre-wide linear park running the length of Daldy St to be completed in 2016 that will connect the headland with Victoria Park to the south.

"The roads through the precinct are being upgraded and a high standard for public spaces and amenities is planned throughout.

"This transformation has been 10 years in the making," Herdson says. "It was all made possible by Auckland Council's Plan Change 4 which rezoned this area from industrial to mixed use while preserving the marine related uses in the area."

Paul Gunn, general manager property for Viaduct Harbour Holdings, says an integrated development plan (IDP) was secured for the site under the provisions of the Plan Change 4. "The IDP is a resource consent which secures the base development envelopes including height and gross floor area (or GFA) for the site, along with the office GFA and car parking allocations which are limited under Plan Change 4.

"The IDP represents several years of work and will provide the buyer of this land with a streamlined resource consent process for ultimate development," Gunn says. "The IDP provides for four buildings on this site: two fronting to Beaumont of up to six floors or 27 metres; a third on the corner of Gaunt and Daldy of up to nine floors or 39 metres; and a fourth on the corner of Pakenham and Daldy of up to eight floors or 35 metres.

"There is a requirement for marine-related uses at ground level on the Beaumont Street buildings but otherwise the IDP provides considerable flexibility for mixed use development which may be either predominantly office, residential or somewhere in between -- depending on which direction a developer wishes to take."

Demolition consents are in place for the majority of buildings with the balance to be removed by tenants.

"The site has a fantastic aspect with the opportunity for westerly water views to Westhaven, and views to the city and Victoria Park, and is well-situated directly opposite the new Central and Linear Park on Daldy Street being developed next year.

"It represents an extremely attractive opportunity to participate in the development of what will be an exemplary suburb underpinned by years of planning and huge public investment. We anticipate a high level of interest from both local and international developers and investors," Gunn says.

Reed says the property is just across Pakenham St from Waterfront Auckland's master planned "Central Precinct" -- the second phase of the Wynyard Quarter redevelopment which will feature a mix of commercial buildings in the "Office and Innovation Hub" along with residential buildings and a new $200 million five-star hotel.

The area is also attracting a great deal of corporate investment in terms of major leasing and development activity, Reed says. "The Wynyard Quarter and Viaduct precincts are already home to some of New Zealand's leading businesses, including ASB, Vodafone, Microsoft, Air New Zealand, and Hewlett Packard.

"Fonterra has begun site work for its new headquarters at Fanshawe St and Halsey St, which will house about another 1000 employees," he says.

"It's easy to see why these major national and international corporates are choosing to relocate their businesses to this area. Massive urban revitalisation is underway, creating beautiful public spaces and entertainment options along the waterfront. There is strong public support for further infrastructure improvements and the area has close connections to the motorway system via Fanshawe Street."

Reed says the area is within a short walking distance of the CBD as is the revitalised Victoria Quarter precinct across Fanshawe Street.

"Last year the redevelopment of the Victoria Markets was completed and low vacancies in the district have encouraged speculative building," he says. "So this is a very good time to be developing new office space in Auckland and particularly in a prime location like this near the waterfront. Given the flexible zoning for the site, the residential opportunity for the Beaumont block is obvious also."

According to Colliers Research, office development activity in the Greater Auckland metropolitan area added about 58,000sq m of supply in 2012 and 2013, but this has not been sufficient to meet the demand which has resulted in rental increases of about 1.2 per cent in the past year and declining rental incentives.