A 13-level Queen Street office building has been placed on the market through CBRE, offering the opportunity to add significant value and capitalise on the regeneration of the Auckland CBD midtown area.
Situated on 1,738sq m of freehold land just south of Victoria Street, 238 Queen Street is being marketed by CBRE brokers Brent McGregor and Warren Hutt for sale by international expressions of interest closing on August 25 at 4pm.
The sale offers investors a compelling opportunity to aquire a value-add project of significant scale at a time when very few other CBD office buildings are on the market, says McGregor.
“This asset presents a notable opportunity to refurbish and reposition a solidly-built office and retail building, which is well-placed to benefit from the regeneration of the midtown area as the opening of the City Rail Link draws closer.”
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The building has dual frontages to Queen and Lorne Streets, along with leases to three government-funded educational institutes and several retailers, anchored by Australian retail heavyweight Cotton On.
This gives the asset a very strong foundation from which to deliver additional value to its new owner, Hutt says.
“The property is well leased, providing stable income while the purchaser plans their programme of improvement works. Given its excellent midtown location, it is ideally positioned to gain significant value from the public and private investment into infrastructure and commercial projects within the immediate locality, in particular the City Rail Link.”
In response to the upcoming opening of Aotea Station, which will have an entrance just 200m from 238 Queen Street, neighbouring landlords are already busy working on building improvements as they seek to capture value from the expected uplift to the area as the City Rail Link opens, says McGregor.
“Aotea Station will be the country’s busiest railway station, so the midtown area is going to improve significantly when the project is complete. The return of international students from next year will also result in a lot more foot traffic in this part of town.”
Immediately next door to the north, Warren & Mahoney has designed a major upgrade of the character building at 228 Queen Street, while on the southern side of the building, 246 Queen Street has recently undergone a full retrofit. 280 Queen Street, a few doors away, is also in line to be upgraded.
Retail activity is also healthy, with Nike due to open a flagship store next door in 228 Queen Street and a Footlocker flagship in 246 Queen complementing the large, two-level Cotton On store on the ground and basement levels of 238 Queen.
One of the largest private projects planned for the area is international property developer Malaysian Resources Corporation Berhad (MRCB)’s 21-storey mixed-use building above Aotea Station, which will incorporate high density residential, retail and commercial, Hutt says.
“MRCB is investing in Auckland for the first time, having clearly recognised the upside to the midtown location with the opening of the CRL.”
A further opportunity to add value to 238 Queen Street exists in the office spaces, which are currently leased at well below market rent levels. A refurbishment of the office spaces could easily result in a significant income uplift across the office floors, says McGregor.
“With the office floors under-rented, this asset will be regarded as good value buying, perfectly placed for repositioning to attract small to medium sized professional firms looking for a Queen Street address.”
The building also includes a high car parking ratio for the area, with 50 car parks on level two accessed off Lorne Street. The office floors also have excellent natural light, with functional floor plates of 612sq m each, Hutt says.
“Eighty per cent of all leasing deals in central Auckland are for floor plates under 700sq m, so these offices are ideally sized in the highest demand bracket for many firms searching for CBD office space.”
Constructed in the 1980s, the 9,789sq m building has achieved 100% of new building standard following a detailed seismic assessment, even though has not undergone any retro-fitted seismic strengthening.
The current owner has invested in significant upgrades, including a new HVAC cooling tower and lift modernisation including new lift controllers, machine gear, car control panels and lift car doors.
Cotton On occupies two high-stud floors fronting Queen Street, with seven other retail tenants (primarily food operators) leasing the remaining retail units on Queen Street and Lorne Street.
Three educational institutions occupy the office floors: Te W?nanga o Aotearoa (two levels), New Zealand Skills and Education Group (two levels) and Eastern Institute of Technology (three levels).
Along with the upcoming City Rail Link, the building is well served by bus routes and is also located within easy walking distance of Commercial Bay, Britomart and the ferry terminals, says McGregor.
“The chance to acquire a significant property in this location is a tremendously exciting proposition, given the thousands of people who are projected to use the nearby Aotea Station daily when it opens in 2024.”
- Article supplied by CBRE
