Landmark buildings, location, profile & upside at Hereford-Plaza
Landmark buildings, location, profile & upside at Hereford-Plaza
19 October 2013
Auckland, 19 October 2013 - One of Auckland’s skyline landmark buildings and its high profile neighbour have come on the market for sale in the exceptional location of 8 Hereford Street and 473-529 Karangahape Road, Auckland.
Marketed by Brent McGregor, Warren Hutt and Jonathan Ogg of CBRE New Zealand, the freehold properties are for sale together or separately by way of Deadline Private Treaty, with a closing date of 14 November 2013 at 4pm.
Brent McGregor, Managing Director of CBRE New Zealand, says the property offers exceptional views, profile, and considerable opportunity for future growth: “8 Hereford Street and the adjoining Plaza are outstanding properties that are perfectly positioned with all the benefits of the central city and the desirable advantages of ample car parks, large floor plates and reputable tenants.”
“The two properties combine as a fine piece of real estate. In a tightening office market, investors and owner-occupiers alike are always on the lookout for sound property opportunities that will see them into the future. With its strategic location and exceptional connections, the Hereford St and Karangahape Road properties offer significant holding income, great potential to add value and some high quality tenants.
“Buildings of this size and nature don’t often come on the market, so we are already receiving interest from high net worth investors and institutional investors. We have already had several inquiries from offshore investors, which is indicative of the quality of the opportunity.
“The properties could be purchased together or separately, but the fact remains the combination of location, profile and potential for upside on offer is hard to ignore. There is currently a good level of enquiry for larger occupiers in particular, being so close to the CBD but with the benefit of ample car parks and more cost-effective rental which makes this an extremely attractive proposition.”
Warren Hutt, Senior Director of CBRE New Zealand, says the opportunity is made up of two buildings with an attractive adjoining shared space linking the two freehold sites.
“8 Hereford St is a major office asset and highly visible and recognisable part of the Auckland skyline – you can’t miss it. Similarly, The Plaza at 473 – 529 Karangahape Road offers a dynamic mixture of boutique retail shops and office accommodation, with enviable frontage to K Road.”
Hutt says the ability to have naming rights of the site means that owner-occupiers or investors can take advantage of the excellent exposure and profile the Hereford St property allows: “You can see the office asset from so many of the city’s vantage points; to have your brand on top of the building would be a major coup at a time when everyone is fighting for profile in the market.”
Both properties are zoned Business 8, which allows for a wide range of activities.
Hutt says that 8 Hereford Street is a strategic asset in the outer city area, occupying a sizable 5,145sq m site on a well-elevated section of the street.
“The office building itself has 15,521sq m of lettable space, and as such it attracts high profile occupiers looking for large floor plates of between 980sq m and 2,500sq m, which is an increasingly sought-after property attribute for office tenants. There are few other office assets offering such large floor plates, particularly in Auckland’s central business areas, so Hereford St is hugely attractive in that respect.
“The building also has 471 car parks below the main office floors, which is a huge draw card for large corporate occupiers – you would quite simply never be allowed to construct so many car parks if you were to build new today. Employees are always looking out for companies offering perks – and car parks are often the pick of the lot.
“The whole building was extensively refurbished for Telecom in 2000. With its A grade seismic rating, the property is a strong investment for the future. With sensational, unobstructed views across the city, it’s not hard to see why we’ve had such strong interest - for both purchase and leasing - in the property already.”
Hutt says the property known as The Plaza at 473 - 529 Karangahape Road is a dynamic mixture of boutique retail and office space, on a busy and iconic Auckland traffic and pedestrian route.
“With three levels of space, The Plaza is an instantly recognisable feature of trendy K Road. There are two levels of office space offering a combined lettable area of just over 3,760sqm, and the ground floor is retail with around 935sq m of space on offer.
“The building offers both heritage character and modern updates, as it was built in the 1900s but refurbished in the 1980s. With distinctive design and excellent frontage to one of Auckland’s busiest roads, The Plaza is well-suited to boutique retail, convenience retail and office operations particularly due to the great spot on K’ Road – right between the CBD and fashionable Ponsonby.”
Hutt says The Plaza has 34 secure car parks, and a total site area of 2,846sqm.
Jonathan Ogg, Senior Director of CBRE New Zealand says the property has a number of reputable, high quality tenant covenants.
“Auckland Council and VisionStream are the two lead occupiers of 8 Hereford Street. Council is on levels 4 - 11 and VisionSteam occupies levels 12 -15, which brings the occupancy of the property to 100% and a weighted average lease term of 2.45 years.”
Net passing income for both the office accommodation and the car parks currently totals approximately $4.6m excl. GST per year.
“The Plaza also has many quality tenants across its space, with Fairfax New Zealand leading the pack as the largest office occupant with 61% of the NLA. Other tenants on the site include Global Visas, Sandfield Associates, Dean Murray & Partners, a popular café, and several fashion, food, beauty and craft businesses.”
Hutt says The Plaza currently generates net passing income of $1,056,735 excl. GST per year, which includes income from the 34 car parks on site.
“With a weighted average leasing term of 2.9 years and occupancy by area of 98%, The Plaza is in a strong position for future upside growth and a repositioning of the retail mix.”
McGregor says the site’s CBD fringe location offers a range of strategic and economic advantages for the purchaser: “The properties sit at the busy western end of K Road, straddling the popular areas of the CBD, Ponsonby and Newton.
“The CBD is just over 1km away from the properties, and Ponsonby Road is just a short 700m walk away. Soho Square, which is currently being developed, is also just 700m away from the properties, so occupiers and employees will have a range of great areas and amenities to choose from.
“Not only is there significant residential development going on at present, with a number of apartment and conversion projects recently announced, but the wealth of public transport links that go straight outside the Hereford and K’ Road buildings make it an even more attractive offer for purchasers and investors looking to secure a strategic foothold in the outer city.
“Once the Auckland Central Rail Loop is complete, a major train station on K’ Road will create even better public transport access to the properties.”
McGregor says motorway linkages are all a short distance from the properties, with the Northern, Southern and North Western motorway on-ramps all less than 1km away.
“Location and connection-wise, the properties are exceptionally well-placed for travel and ease of commuting for staff, office visitors, and shoppers. Add to that the amount of foot traffic and the 20,000 cars that pass the site each day, this high profile and well exposed site demands attention.”
Vacancy rates in the city fringe have been consistently decreasing since 2011, reaching a five year low in June this year, which the Hutt says is indicative of rising demand for quality property outside the CBD area.
“There is incredible demand for well-located city fringe stock, with tenants constantly on the lookout for cost-efficiencies and development opportunities. The overall volume of vacant space on K’ Road has almost halved over the past year, which is another strong indicator of the stability of the outer city area. The current K’ Road vacancy rate is less than the CBD average, demonstrating how lucrative the area is for operators looking for alternative space.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.