Auckland, 22 November 2014 - At a time when suburban Auckland office vacancy rates continue their downward trajectory, a high quality, modern four-level commercial building offering significant future flexibility for investors or owner occupiers has come up for sale at 8 Rockridge Avenue in Penrose, Auckland.
Marketed by Jonathan Ogg and Bruce Catley of CBRE on behalf of DNZ Property Fund, the freehold property is for sale by deadline private treaty closing Friday 5 December at 4pm unless sold prior.
Jonathan Ogg, Senior Director Capital Markets at CBRE, says that the property’s attributes are many.
“The vendor’s price expectations are currently below replacement cost, which provides considerable future value add prospects for the purchaser, and the building has an A Grade seismic rating, assessed at 90% of New Building Standard (NBS). The site provides 130 car parks and is in close proximity to a range of transport options.
“With good passing income, a strong opportunity exists here to add value, harnessing rental upside potential from the existing building and additions, given the size of the site and its zoning. All of these factors combine to offer considerable future flexibility for an investor or owner occupier. This is a great long term asset with scope to lift tenant income, or a superb place to own and base your head office.”
Occupying a large 4,900sqm site, the property enjoys approximately 90sqm of frontage to Rockridge Avenue.
Built by Fletcher Construction and completed in 1997, the four-level commercial building offers a total net lettable area of 3,149.3sqm.
28 secure car parks are provided on the ground floor within the building footprint, and further parking for 102 cars brings the total to 130 car parks on site.
Bruce Catley, Managing Director South Auckland for CBRE, says that the current owners have invested in the quality of the building’s fit out.
“The sleek architecture of the building and excellent stud height, including its atrium, is complemented by the existing fit out, raised flooring and up to date building services.
“The building has two 900kg Kone lifts to provide access to all building levels.”
The property provides total net annual income of $292,014.40 through leases to The Fletcher Construction Company, Matrix Security and Advance Retail Technology Limited.
Advance Retail Technology Limited is a member of 3Q Holdings Group of Companies, an Australian-based software and services company focusing on the retail industry.
Matrix Security Limited is an established New Zealand-owned and operated security company that has been trading since 1993. It has bases throughout New Zealand and employs over 250 people.
The Fletcher Construction Company Limited is part of the Fletcher Group, which is one of Australasia’s most respected public companies, with significant resources to invest in technology and new businesses. They employ approximately 18,600 people in more than 50 businesses.
Ogg says that the opportunity exists to increase net income considerably. “As the tenants in this building are quality organisations, there is a significant prospect of attracting additional tenants and increasing total net income potential for the property, which has been estimated at $695,833.00 on an annual basis.”
Located on the southern side of the quiet street that is Rockridge Avenue, the property is approximately 150 metres from the intersection of O’Rorke Road, providing excellent access to the local arterial Church Road and Station Road.
Catley says: “Great South Road is close by, offering further amenity and a major arterial route through to the city, and motorway access is also provided nearby to Southern, Northern and Western Motorways.
“The popular Kreem café is a short walk from the building providing excellent amenity. The Penrose train station is approximately 600 metres from the building, providing staff with an efficient transport option within convenient walking distance. Mt Smart Regional Park is located to the immediate south of the property, offering easy access to Mt Smart Stadium, the athletics track and sports fields.”
Ogg says that suburban office vacancy rates have been trending downwards since the first half of 2011 and have fallen in six of the last seven surveys carried out by CBRE Research.
“As of mid-2014, suburban office vacancy in Auckland was 9.2%, equating to around 148,000sqm of office floor area. These figures reflect the strength of the suburban office market, as over this time some 79,000sqm of office space has been added to the market.
“Stock withdrawals for conversion, most commonly for residential apartments, are also placing pressure on suburban office stock. We expect suburban office vacancy to continue to decline into 2015.”
He adds that this decrease has had a substantial effect on yields. “After peaking at 9.45% in late-2010, early-2011, overall suburban office yields have since fallen 170 basis points on average and were assessed at 7.76% in September. We anticipate further yield firming in average yields over the next two years, before we forecast a levelling-off at circa 7.28% in early-2018.”
Catley adds that net effective rentals have been rising since 2011, consistent with the decline in vacancy, reflecting a shifting emphasis to growth in face rentals.
“Another notable rental trend is the relatively strong rental performance of Secondary market sectors. As of September 2014, indicative average Prime suburban office rents are $320 per square metre, which have increased by 5.4% over the past 12 months, while average Secondary rents are $220; an increase of 9.5% over this period.”
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 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 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.