Historic building a trophy in revitalised location
Historic building a trophy in revitalised location
19 September 2015
Auckland, 19 September 2015 - A significant historic building in Auckland’s central business district has come up for sale through CBRE, offering investors the chance to acquire a trophy asset in the regenerating uptown precinct.
The property offering also includes the Reslau Building at 39 Elliott St, as well as the popular Elliott Stables ‘epicurean village’ which extends across the ground level of both buildings, says Hutt.
“This is a very significant investment proposition which provides a strong and diversified income stream from several sources. Add to this the building’s status as a well-known historic landmark, and its position on a prime CBD corner which is seriously part of the action, you have a package offering real trophy value and pride of ownership.”
The property houses 26 separate retail tenants, 65 managed residential apartments and a backpackers’ hostel, contributing total net passing income of around $3.18 million.
“Among the tenants are the well-known Tony’s steak restaurant, the Middle East Café and of course the Elliott Stables, which is a firm favourite among CBD office workers and visiting tourists.”
The multiple occupiers mean the owner is not exposed to undue income risk should a vacancy arise, Hutt says. “Investors will consider the property’s location a big plus for attracting and retaining tenants, with the residential component of the building 100% occupied and subject to strong demand, and the Elliott Stables continually popular with occupiers and customers.”
Auckland Council, the government and private developers have made a strong commitment to the location, with major investment flowing in to key nearby projects including the City Rail Link, the Civic Administration Building, the Aotea precinct, the proposed convention centre and the Elliott St and Federal St shared spaces, says Hutt.
“The property is positioned in a really buzzing part of the city where a strong growth story is underway. The building therefore offers significant potential future value when you consider the improvements to the area that are on the cards.”
While CBRE expects to receive interest from investors attracted to the strong location and the well-diversified range of tenants, many of whom are long-term occupiers; developers are another possible buyer type, says Hutt.
The five-level T&G Building was designed by Thomas Mahoney and built in 1910 as a warehouse for Archibald Clark & Sons Ltd, a firm of warehousemen and clothing manufacturers. The original warehouse space is now the site of the Elliott Stables epicurean village.
Clark was the first Mayor of Auckland, and also represented Auckland City constituencies in the House of Representatives from 1860 to 1870 and the Franklin seat from 1871 to 1874. At the time, the front sections of the building were occupied by local businesses including a health food depot, millinery, electrical shop and tearooms.
The Renaissance-style building was purchased in 1928 by the Temperance and General Mutual Life Assurance Society (T&G) for its Auckland branch. The company remodelled the building and added the two-story high tower – a distinctive feature of the society’s buildings. With the tower in place the T&G building was a prominent feature of the Auckland skyline and is thought to have been the tallest structure in Auckland when the tower was completed in 1930.
Two floors were occupied by T&G with the remainder leased out to retailers and office occupiers. Very little of the building’s external appearance has changed since those days, says Hutt.
“Heritage New Zealand has classified the building as a Category 2 Historic Place, recognising the historical significance of the property. However, this status only covers certain elements of the building and does not preclude the owner undertaking further development.”
Reslau House was built in the 1890s above what is now part of the Elliott Stables, along with character office space on the upper floors.
Today, the property is owned by private investors, who purchased it in 2001 and were responsible for the creation of the popular Elliott Stables. The owners also converted the office space on the upper levels to boutique apartments.
“The building has been very well maintained and cared for, with the vendors having positioned it as a key food destination and long-stay apartments,” says Hutt. “The current owners have completed a sensitive renovation project which combines the building’s historic features with new facilities to create stylish and comfortable accommodation.”
The property was once run as a boutique hotel and although the building still carries the name, it is now 45% occupied by retail tenants, with the managed apartments making up a further 39% of the net income. Other commercial and office tenants make up 10% of the building with the backpackers’ hostel on level five taking the remaining 6%.
Ten of the retail tenancies front Wellesley St, with a further 16 within the Elliott Stables food precinct. The vendors are underwriting some small vacant retail spaces for two years, meaning the property will be offered 100% occupied to the new owner on settlement, says Hutt.
“There is active enquiry for the vacant units, with potential occupiers attracted to the up-and-coming location and the constant popularity of the food outlets in Elliott Stables among customers.”
The 65 managed accommodation units vary in size from studios to four-bedroom apartments. All are fully furnished and self-contained, including kitchens, bathrooms, telephone and internet service and modern security systems.
The units also incorporate many of the building’s historic features, including sash windows, high studs and antique decorative plasterwork ceilings. They are rented from $340 a week up to $1,100 a week.
The largest single occupier (by rental) is Rocat Investments, which operates the Attic backpackers’ hostel. A 100-bed backpackers has been operating at the property since 2002, on a net lease which extends until 2019.
“The backpackers’ hostel is popular among budget travellers because of its location right in the thick of the action, within walking distance of Britomart and Queen St shopping and night life as well as attractions such as Sky City and the waterfront.”
The building occupies a 1783sqm corner site spread across two titles in a ‘tried and true’ commercial and retail area that is a centre of renewed attention, says Hutt.
“This property’s location, positioned between the Smith and Caughey’s department store and Auckland Council’s building on Albert St, has been constantly popular over the years and is now receiving council investment which is spurring on renewed interest and regeneration.”
Since the opening of Auckland Council’s ‘shared space’ revamp of Elliott St in 2011, the street is a much more attractive place, Hutt says. “Elliott St once had an uninviting, ‘back street’ feel but it has now been transformed into a buzzing and up-and-coming precinct, led by Auckland Council’s efforts to improve it through construction of a shared space in place of the previous conventional street.”
The council’s award-winning shared spaces programme, which has been hailed a success by many commentators, is intended to transform and revitalise city streets into pedestrian-friendly destinations where people can shop, sit, relax, linger, dine and spend time. In shared spaces, the traditional distinction between footpath and road is removed, along with visual enhancements including paving, seating and trees.
The Elliott St was one of the first shared spaces to open, following the adjoining Darby St, and several other streets throughout the CBD have now been revamped including nearby Federal St, says Hutt.
“The positive impact of the shared spaces on Elliott St is obvious, with the street now drastically improved visually and offering many quality shops and cafes alongside the famous Elliott Stables.”
Another key local improvement is the council’s revamp of Bledisloe Lane opposite the T&G building, linking Wellesley St with Aotea Square, says Hutt. “Bledisloe Lane is a popular thoroughfare for workers, tourists and theatre-goers. It is now much brighter, safer and more attractive, and forms a vital part of the walking link between Aotea Square down Elliott St and on to the waterfront.”
The City Rail Link project is also expected to benefit the ‘uptown’ area, Hutt says. “The southern entry to Aotea Station is within 100m of the property and is predicted to become the busiest station on the Auckland rail network when it opens.”
Further council investment into the Aotea precinct is expected to provide a further boost to nearby property values, as well as revitalising the entire CBD.
Plans recently announced include a $64 million facelift and extension to the 25-year old Aotea centre. It is one of four development sites the council is seeking public input on to breathe new energy into Aotea Square.
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 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 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.