Award-winning NZI Centre for sale

The NZI Centre in Auckland’s Viaduct Harbour has been placed on the market for sale, offering investors the chance to acquire a trophy office asset in a prime location leased to an international insurance giant.

The award-winning building, at 1 Fanshawe St, is occupied by IAG New Zealand Ltd, New Zealand’s largest general insurer. It is being marketed locally and offshore by exclusive agent CBRE, with expressions of interest closing at 4pm on Thursday April 2 2020, unless it sells before the deadline.

Warren Hutt, who is marketing the property with colleague Brent McGregor, says the building’s high-quality design, construction and green credentials are just a few of the factors which make it a highly desirable acquisition for institutional and high net worth investors.

“At a time when national and international investors are seeking to allocate large volumes of capital, we’re delighted to bring this prime asset to market. It’s an iconic building and we’re anticipating strong interest from offshore as well as locally.”

The building was designed and built to a very high standard in 2009 and performs at a level which places it among the top office buildings in the entire Auckland CBD, both in terms of its sustainability and its interior environments. It has a rating valuation of $73 million.

“Its spectacular architecture and interior design have received no less than six industry awards including the Property Council Supreme Award in 2010. The building continues to stand the test of time, both in terms of its external and internal visual appearance as well as its performance.”

The NZI Centre is one of just three buildings in Auckland to achieve a 5.5 NABERSNZ rating. It also holds two separate five star ratings from the New Zealand Green Building Council for office design and office interiors, says Hutt.

“This building was one of the first to achieve a green star rating in the country and continues to be one of Auckland’s most sustainable buildings. The fact that it continues to perform at this level is testament to its best-in-class, forward-thinking design.”

The lease to IAG NZ generates almost $5.1 million in annual net passing income, with regular rent reviews to the consumer price index (CPI) plus 1%. Rights of renewal potentially extend the lease to 2034, McGregor says.

“This asset is extremely well leased, with a net lease to IAG NZ which holds a ‘very strong’ AA- credit rating from Standard & Poor’s. In terms of secure corporate tenants, it’s difficult to find better than this.”

IAG NZ’s parent company, ASX-listed Insurance Australia Group (IAG), is the largest general insurance company in Australia and New Zealand, underwriting AU$12 billion of premiums a year.

IAG NZ currently insures 1.7 million New Zealanders (representing a 42% market share) and underwrites general insurance for ASB, BNZ and Westpac. Its local brands include NZI, AMI, State and Lumley.

The building’s design was inspired by the socially and environmentally-responsible values of IAG NZ, says Hutt.

“It was designed to create an internal environment which captured the energy of the busy central city intersection outside, but also to provide a quiet sanctuary inside. Placing the occupant environment at the centre of its innovative design kicked off a step up in quality within the New Zealand office market at the time,” he says.

“As one of the first buildings in the country to draw on a new generation of socially and environmentally-responsible construction methods and materials, the NZI Centre continues to be one of the most sustainable, efficient and high-performing office buildings in the country.”

The 9,446sq m, five-level building offers large, open floor plates of between 1,687m2 and 1,955sq m with interconnecting stairs. A separate basement level contains 65 car parks, bike parking and shower facilities.

Its sustainable features include an architecturally-distinctive double-skin façade, along with a green roof, triple glazing on the north side of the building, under-floor air distribution and electricity-generating lifts.

Automatic blinds control glare and solar gain, while energy use is reduced by timers and motion sensors on lights. A 21-metre high central atrium provides excellent natural light throughout the building, McGregor says.

“The building’s interior design is really quite striking, with staff and visitors also able to enjoy excellent amenities including a ground floor café and rooftop garden which provides panoramic views.”

The building occupies a prime 2,604sq m corner site on perpetually-renewable leasehold land, offering investors the security of a ground lease which is guaranteed to continue indefinitely.

The site fronts an intersection with one of the highest traffic counts in the Auckland CBD, where around 40,000 vehicles pass daily, says Hutt.

“This spot is a gateway to the CBD and as such is a very busy location. It’s also ideally placed within the Viaduct Harbour precinct, which is benefiting from what we call the ‘north west drift’ of corporate occupiers towards Wynyard Quarter, the Viaduct and Victoria Quarter.”

This shift in major corporate activity has resulted in the north western waterfront area becoming a premium destination for investors in Auckland, McGregor says.

“We know the investment appetite for assets in this precinct is very strong, with the recent example of Blackstone having allocated significant capital to property here. We are likely to see more offshore capital invested in this area, and based on sales trends over the past decade or so a lot of this will be maiden capital landing in New Zealand for the first time.”

The market for A-grade assets in the Auckland CBD is tightly held, with only 13 transactions concluded in the Auckland CBD since 2016. This makes the NZI Centre a genuinely scarce offering, Hutt adds.