Amid a surge in investor interest in commercial property in Christchurch, a significant central-city office asset on over 5000sqm of prime freehold land has been placed on the market by CBRE on behalf of Countrywide Group.
105 and 123 Victoria Street comprises a five-level office and hospitality building generating around $3.1m in net annual rental income, along with a large parcel of developable land. It is for sale by deadline private treaty closing at 4pm on November 19.
CBRE Christchurch managing director Tim Rookes, who is marketing the property along with colleagues Cameron Darby and Bonnie Stone, says he is expecting multiple offers for the near-new building, which is “one of the highest quality investment office offerings seen on the New Zealand market in 2020”.
“As only the second premium-grade, new-build office asset to be formally offered on the open market in Christchurch in over 10 years, this is a genuinely rare opportunity. It offers scale, superior build quality, a prime location and a diversified income stream from blue-chip occupiers in the medical, primary industry and professional services sectors,” Rookes says.
“There is a significant level of pent-up investor demand searching for large-scale, top-quality property assets nationally, with very few assets coming to market to meet this demand. This offering displays a set of premier, top-grade investment fundamentals and we’re expecting very strong investor participation.”
The building comes to market following two other high-profile Christchurch CBD office asset sales in 2020, both completed by CBRE.
In September, the Manawa building at 10 Oxford Terrace was sold to an individual investor for around $80m – the highest-value single-building transaction ever to be concluded in Christchurch. In January, CBRE brokered the sale of the Vodafone building at 213 Tuam Street to a local investment syndicate for $59m.
Christchurch has been propelled into the investment spotlight this year and is expected to continue to enjoy a sustained period of investor interest, says Rookes.
“Yields have reduced in Christchurch but the city still presents excellent value for investors compared with Auckland where yields are now very low. This has helped unleash an unprecedented wave of investment activity into Christchurch. The availability of newly-built assets with extremely high levels of construction quality and seismic strength is a further draw.”
In addition, the interest rate outlook is fuelling an enormous wave of capital looking for commercial property opportunities nationally, says Darby.
“Syndicators in particular are once again very active, along with a large number of high net worth private investors seeking above-bank returns as the potential of negative interest rates looms.”
123 Victoria Street was designed by MAP Architecture and constructed in 2017 by Clearwater Construction.
It provides a total of 7,462sqm of net lettable area, with tenants enjoying the building’s contemporary, energy-efficient features, excellent natural light and spectacular views from the upper levels.
Nexia New Zealand, a large business advisory and accounting firm with offices in Auckland and Christchurch, leases the top floor and has naming rights to the building. The company is part of Nexia International, a leading global network of firms.
Farmer-owned meat export company Alliance Group, NZ Merino and Pacific Radiology occupy the other three office floors, with the major tenants’ leases contributing a weighted average lease term (WALT) of just over eight years. All leases have built-in rental growth clauses.
The office tenants are all extremely high-quality businesses which have deliberately chosen this location, despite having had the choice of taking office space in the core CBD, says Stone.
“The tenants want to be here because of the prestigious address, fantastic access, good car parking and the excellent amenity value of Victoria Street. This has to be one of the most accessible locations in central Christchurch and offers a whole host of benefits and convenience, while still enjoying everything the central city has to offer.”
Market-aligned rent levels are a further benefit of the building for tenants, in contrast to the over-renting which has become an issue in several office buildings in the core CBD, Rookes says. “Rents here are the most closely market-aligned in town, which is a key differentiator.”
The tenants have all invested in their fit-outs with some stunning results, notably NZ Merino’s space, which was a finalist in the Designers’ Institute Best Awards 2019.
Coffee Traders and Vietnamese restaurant You Hanoi Me occupy two of the four ground floor hospitality spaces. Advanced discussions are underway with a highly experienced local hospitality operator looking to fill the two remaining units on the ground floor, says Stone.
“The hospitality spaces are in a fantastic location facing the sunny boulevard along the northern side of the building, which features Gregor Kregar’s ‘Paradox Void’ suspended sculptures and has a high-end, urban-chic vibe,” she says.
“Heading into Cup Week and summer, Victoria Street always performs exceptionally well and is home to several long-established restaurants and bars including The Dirty Land, King of Snake, Mexicano’s and Athens Yacht Club, which have all weathered Covid-19. These establishments, along with a number of successful boutique retail stores, have all contributed to Victoria Street continuing to be a strong regional destination for shopping and night life.”
The property includes 121 on-site car parks, most of which are situated on the empty 2,500sqm corner site on the south side of the building and facing the junction of Montreal, Salisbury and Victoria Streets, says Darby.
“Being able to purchase an office asset of this quality along with a prime central-city redevelopment site is extremely rare. The vacant site currently provides additional income, so the new owner may elect to continue using it for car parking and land bank it for the future, or look to develop the site and make the most of its high-profile location on the corner of three principal arterial routes passing through central Christchurch.”
Richard Diver and Mike Sullivan of Countrywide Group say they are “immensely proud” of the building and its contribution to the vibrancy of Victoria Street and the Christchurch cityscape as a whole.
“Not only is this our largest development to date, we feel it is also our best,” says Diver. “I’m very proud of it and it’s certainly a defining development for Countrywide. We’re delighted that it has attracted such high-quality tenants and we are happy to see it continuing to contribute to the fabric of Victoria Street, a part of Christchurch which we remain highly positive about.”
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