Office investment with govt tenants

A refurbished office building on Auckland’s Southern Corridor is for sale as a fully leased investment opportunity with two government organisations among its tenants.

The four-level commercial property, at 626 Great South Rd, Ellerslie, occupies a 2878sq m site with high-profile exposure to one of Auckland’s main arterials.

It is offered to the market at a time of low office vacancy rates throughout metropolitan Auckland, which continues to drive up rents.

Colliers International is marketing the property for sale by deadline private treaty closing at 4pm, Thursday August 22, unless sold earlier.

Blair Peterken,director of capital markets at Colliers, says it is a chance to acquire a superbly located office with excellent fundamentals.

“The Southern Corridor is one of the premier office destinations in Auckland, but stock remains tightly held,” Peterken said.

“The property is well located in a hive of office development including two popular business parks — Central Park and the nearby Millennium Centre.

“It returns $911,935.84 in net annual income from four tenants, including Housing New Zealand and the government accreditation body IANZ.

“The leases offer a weighted average term of two years, while the vendor has the ability to underwrite the leases for a weighted average term of four years.

“With its strong tenant covenant, healthy tenant demand and an excellent location, this is a highly appealing investment opportunity.”

The property has a net lettable area of 2647sq m, with generous upper floor plates of 788sq m each. It was built in the 1980s and has an A-grade 90 per cent IEP seismic rating.

Broker Simon Child says the vendor has undertaken extensive work to bring the building to a quality modern standard.

“The exterior has been repainted and new roadside pylon signage has been installed,” he said. “Inside, the lobby has been refurbished with new tiling, walls, lighting and a digital directory for the building.”

Jason Seymour, capital markets director at Colliers, says the building is situated on a highly prominent site with great exposure to high volumes of passing traffic.

“The land itself is a strategic holding in a well-established commercial precinct. Flexible Business-Mixed Use zoning under the Auckland Unitary plan allows for a range of options in the longer term.

“The property would blend seamlessly in to the surrounding suburbs if redeveloped to residential. Nearby schools include Ellerslie school, One Tree Hill College and St Mary’s school.”

The ground level has 283sq m of office space along with the main lobby, services, amenities and a secure undercroft parking area.

Double automatic doors to the lobby provide entry via the southeastern corner of the building.

Two 11-person lifts service all office floors in addition to a stairwell accessible from the lobby.

The ground floor tenancy comprises full-height glazed frontage and separate office rooms, a kitchenette, toilet facilities and a rehabilitation room. The tenant is TBI Health, a physiotherapy clinic.

Level 1 is highly partitioned with individual office rooms, separate meeting rooms, kitchen and toilet facilities. It is tenanted by IANZ.

Level 2 is relatively open plan with several file storage rooms and glass-partitioned meeting rooms along with kitchen and toilet facilities. It is tenanted by Housing New Zealand.

Level 3 is split into two tenancies accessed via security doors from a common lobby.

Both tenancies are heavily partitioned with offices and meeting rooms along with kitchen and toilet facilities. The tenants are IANZ and assessment and certification business Telarc.

The property provides 90 on-site car parks. Most are open parking spaces around the perimeter, aside from 11 undercroft car parks.

Great South Rd is a key arterial route connecting the western and southern suburbs to the commercial precincts of Newmarket, Greenlane and Ellerslie.

It offers multiple points of access to the Southern Motorway/State Highway 1.

The property is just north of Kalmia St, which connects Great South Rd to Ellerslie. Neighbouring properties include Millennium Centre, Wendy’s hamburgers and Ellerslie School.

A number of main bus routes service the property, while Ellerslie train station is a 450m walk away.

The property is 1km to Ellerslie town centre, 9.7km to Auckland CBD and 15km to Auckland airport.

Seymour says rents and land prices in the area are continuing to climb.

“The average prime metropolitan office net face rent increased by 3.6 per cent in the last year.

“The average prime investment yield firmed by 56 basis points, which has led to the average prime capital value rising by 12.5 per cent.

“Competition remains high for metropolitan office properties, driving up prices. Historically low interest rates are projected to continue into the near future, causing further downward pressure on yields.

“As a result, the Southern Corridor hubs of Ellerslie and Greenlane remain hugely popular locations for office investors and owner occupiers.”