Three-building Penrose business park for sale

5:00 AM Saturday February 27, 2016 Colin Taylor

The Connect Business Estate is for sale at 581-585 Great South Rd, Penrose.

A fully leased three-building office business park is for sale in Penrose presenting investors with the opportunity to purchase a property with a solid long term cash flow.

“The income is secured by a quality tenant covenant,” says Andrew Reed, director of capital markets for Colliers International who, with colleague Greg Goldfinch, is exclusively marketing the Connect Business Estate at 581-585 Great South Rd for sale by international private treaty closing at 4 pm on March 17 at Colliers’ 151 Queen St office.

Connect Business Estate is owned by listed commercial property business Goodman Property Trust and has been on the market with a view to recycling capital into new developments.

“These include Highbrook Business Park which incorporates a business town, retail hub and commercial services across 107 hectares,” says John Dakin, CEO of Goodman NZ.

Reed says the 9655 sq m site with a net lettable area of 8903 sq m generates an annual net passing income of $2,919,510 plus GST, with a Weighted Average Lease Term (WALT) as at July 1, 2016, of 9.37 years by income.

“Having the fundamentals of excellent lease terms and established tenants, this sale represents a solid investment opportunity,” Reed says.

He says the three connected buildings, built by Fletcher Construction, are octagon shaped, with a seismic rating of 166 per cent of New Building Standard (NBS).

“Ron Trotter House and James Fletcher House comprise three levels of office area, while Wright Stephenson House is five levels high. All the office levels have direct internal access to a three level, secure car park.

“The octagonal shape of the buildings allows for large, efficient floor plates which is a great future proofing feature.”

The complex is constructed of reinforced concrete column and beam frame, with precast concrete floors and external sheathing of double glazed curtain walling and granite panelling along with tinted glazing and aluminium frames.

The buildings are connected via two entrances, which lead to tiled lobbies each containing two 14 person lifts and full height atriums.

Reed says the main entrance has recently been completely refurbished, including new floor tiles, lift surrounds, soft furnishings, LED lighting and a digital directory board.

A landscaped courtyard on Level 2 provides tenants with an outdoor area that can be accessed through the main lobbies.

“The office layout is generally made up of an open layout around the perimeter of each floor with open areas, meeting rooms and kitchenette facilities towards the centre. The majority of the floors have been majorly refurbished within the last two years to a high standard,” Reed says.

The building has a 1,000kVA 3 phase standby generator with a 2860L fuel tank capacity that gives over 12 hours of running time with full back up power to the three office buildings.

Goldfinch says the long-term security of the investment property is under-pinned by the location.

“A key commercial estate in the Penrose area, it has a prominent position on Great South Rd opposite the intersection with Penrose Rd, and is surrounded by amenities and key transport routes. Ellerslie Town Centre and Sylvia Park are only a few minutes’ drive away.”

The property is zoned Business 5 under the operative Auckland City District Plan Isthmus Section and is designated to be rezoned Light Industry under the Proposed Auckland Unitary Plan. The Light Industry zone permits a wide range of activities, including workers’ accommodation, dairies, food and beverage outlets and offices.

Goldfinch says the popularity of Penrose as an industrial location can be attributed to its ease of access to State Highway 1, its relatively short distance from the CBD, good access to the airport via SH20 and its closeness to nearby skilled labour pools in Onehunga, Mt Wellington, Ellerslie, and Greenlane.

“This accessibility makes it a hot spot for tenants, owner occupiers and investors – so vacancy rates are extremely low, placing upward pressure on rents in the Penrose area. This would give the property’s new owner the prospect of increasing income in the future.”

He says values in Penrose are also tipped to improve following the Government’s recent announcement of its intention to streamline the consent process for the $1.85 billion East-West Connection roading project to provide a seamless link between the southwestern State Highway 20 motorway and the north-south SH1 motorway. “Construction could start as early as 2018.”

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Andrew Reed (left) and Greg Goldfinch (right), of Colliers International