Towering Investment Opportunity at 205 Queen Street
Towering Investment Opportunity at 205 Queen Street
| 15 May 2017
205 Queen Street, one of the largest, most recognisable and comprehensively specified office towers in Auckland’s central business district, has come up for sale.
A significant A-Grade office building with a diversified income stream in one of the most vibrant commercial precincts in Auckland’s thriving city centre, 205 Queen Street is being marketed internationally by exclusive agents Brent McGregor, Warren Hutt and Mark Maginness of CBRE through an International Expressions of Interest (EOI) process, inviting EOI submissions by 4pm on Thursday 1 June 2017.
Brent McGregor, Senior Managing Director of CBRE New Zealand, says that this prominent property, which occupies one of only two island sites on Queen Street, will be a significant attraction to investors in New Zealand and internationally.
“205 Queen Street is a magnificent asset, and for a number of reasons. Firstly, A-grade CBD Auckland office towers are not often offered to the market. In fact, over the past ten years only six or seven prime core CBD office towers have been sold: the Lumley Centre on Shortland Street, the Deloitte Centre at 80 Queen Street, the SAP Tower at 151 Queen Street, HSBC House at 1 Queen Street, Auckland Council’s offices at 135 Albert Street, and the AIG building on Shortland Street. This is less than one per year, and reflects the sought after nature of major prime CBD product.
“Secondly, at one of the busiest CBD intersections, 205 Queen Street is in an exceptional position – and one that is only being improved by Auckland Council’s investment in streetscape and a new City Rail Link station being built very close to the building.
“Finally, the diversity of retail and office income that this 95 per cent occupied property offers in the heart of the Auckland CBD means that its new owner stands to reap many long-term benefits.”
Built in 1990 to A-Grade specification, 205 Queen Street comprises two office towers with two podium retail levels, atrium and basement parking for 125 cars on a 3,764sq m city block site. Tower 1 has 17 office levels, and Tower 2 has 22 office levels.
The property is one of the few CBD buildings in New Zealand with a 4-star NABERS NZ energy rating and a 5-star Green Star design rating. It also has a strong seismic rating of 133% of the current New Building Standard.
Warren Hutt says that the property offers 585sq m office floorplates, sized perfectly for the Auckland office occupier market.
“84 per cent of all leasing deals in our market are below 600sq m. Smaller office tenancies have traditionally been subject to strong occupier demand in Auckland, and the configuration of the floorplates also allows for easy subdivision into multiple tenancies.”
Hutt adds that the building has been exceptionally well managed by Kiwi Property Group in recent times. “It has enjoyed several building upgrades over its life, as part of which Tower 1 was significantly refurbished in 2013.”
Offering a Net Lettable Area of 25,381sq m, and a current occupancy rate of 95 per cent on a 3.9 year Weighted Average Lease Term, 30% of the building’s current annual Net Passing Income of $10,679,760 comes from retail tenancies, with the remainder from office occupiers.
ANZ’s flagship NZ retail branch, The Flight Centre, The Body Shop, Domino’s Pizza and Gloria Jeans are among the many recognisable retail tenants, while above them major office tenants include DLA Piper, Kiwi Property Group, The Reserve Bank of New Zealand, the Bank of China, Allianz, and Brookfields.
Mark Maginness says that the property is underpinned by a number of strong lease covenants.
“The property offers an attractive tenancy and expiry profile, with a diverse spread of income, expiries and industry types that create confidence around the security of present and future income. Moreover, the majority of the leases include fixed rental growth provisions.”
Occupying a prime island site with four street frontages in the absolute core of the Auckland CBD, 205 Queen Street is exceptionally located in the heart of Auckland’s CBD on the corner of Queen and Victoria Streets, says Hutt.
“This is a prime position in the heart of the Auckland CBD, with some of the highest volumes of pedestrian traffic in New Zealand. The surrounding area offers a high degree of amenity including shopping, entertainment, art galleries, casino and acclaimed dining precincts.
“Queen Street has also been significantly enhanced as the city’s premier retail and commercial thoroughfare, as Auckland Council has committed significant investment into shared streetscape. A major beneficiary of this has been 205 Queen Street, with the upgrade of the Darby Street and Elliott Street frontages.”
He adds that 205 Queen Street is in prime position to benefit from future projects, including Auckland’s largest infrastructure project, the City Rail Link.
“The proposed Aotea Station is presently under construction and due to open in 2023, offering nearby access from Victoria Street: effectively on the doorstep of the property.
“When you consider that the building is in a prime position to capitalise on Auckland’s future development, that all of the other prime grade CBD towers are held by long-term owners, and the lack of stamp duty in New Zealand, this property represents a major scale opportunity for institutions looking to develop their holdings in the New Zealand market.
“Not only does 205 Queen Street offer scale for investors, but there may not be another high rise tower of this scale on the market for many years, so now is the time for investors to give it serious consideration.”
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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 (based on 2016 revenue). The Company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.