Big Queen Street site offers significant potential

The second largest land holding on Queen Street is on the market for sale – presenting a significant land acquisition and future development opportunity.

450 Queen Street is a strategic parcel of freehold land totalling 4,234sqm (approx.), with existing improvements including three interconnected buildings offering significant scope for developers, value-add investors and occupiers.

CBRE Capital Markets Senior Director Warren Hutt, who is marketing the property with Executive Chairman Brent McGregor and Senior Negotiator Brad Ross, says the site’s size and location provide exciting options for large-scale high-rise future redevelopment encompassing close to 34,000sqm of gross floor area, or a significant land banking opportunity.

"This is a substantial parcel of freehold land with Business - City Centre zoning, accommodating development up to 50 metres in height and potentially up to 72.5 metres high under the proposed Plan Change 78."

"Under current zoning rules, a building comparable to the Seascape tower on Customs Street East can be developed by right, presenting an unparalleled opportunity to deliver a project of significant scale on one of the largest development sites available in central Auckland."

"Urban regeneration and renewal is already underway in the immediate locality, with over $2.2 billion of projects either recently completed or underway. These include accommodation, data centre, education, office and public infrastructure developments", says McGregor.

"450 Queen Street is also located midway between Te Waihorotiu (formerly Aotea) and Karangahape City Rail Link stations, which will significantly increase pedestrian volumes in this area and kick-start further regeneration."

The property, which is offered for sale by expressions of interest closing on Thursday March 14 2024 at 4pm, also offers the opportunity to repurpose the existing buildings, which provide large floor plate accommodation priced well below replacement cost, Ross says.

"The existing structures are currently configured for office and education use but the large floor plates provide flexibility for alternative uses. The location is suitable for a wide variety of commercial uses, including last-mile distribution, self-storage, traditional or dark store supermarket or other retail, medical or education."

The buildings on site provide 9,490sqm (approx.) of lettable area and 173 car parks, currently generating holding income of $949,378 a year from leases to Government services, hospitality and commercial parking tenants.

In terms of the site’s future development potential, student accommodation and apartments both present compelling opportunities, says Hutt.

“This expansive site is considered ideal for high-density residential development. We are expecting to receive interest from buyers considering student accommodation developments, given the location within 500 metres of both Auckland University and Auckland University of Technology, as well as Karangahape Road with its multiple eating and socialising options.”

There is a significant undersupply of student accommodation in central Auckland, with the University of Auckland receiving 8,500 applications for its 4,500 beds in 2022. The university has a target of providing 7,500 beds by 2026.

"Build-to-rent or build-to-sell apartments are also expected to be on buyers’ radars, given the site’s location on the edge of the CBD and within Auckland Grammar and Auckland Girls’ Grammar school zones. MBIE Tenancy Services data shows rents for Auckland CBD apartments grew by 15% in the year to June 2023", McGregor says.

“The dynamics in the central Auckland apartment rental market are currently favourable for investors, with a constrained development pipeline and an existing undersupply of accommodation creating rental growth. Positive net migration trends and continued population growth are also forecast, creating a compelling demand backdrop supporting apartment development.”

Auckland recorded an annual population growth of 2.78% in the year to June 2023, the strongest in over 30 years, according to Stats NZ. In addition, CBRE’s Migration Figures Report suggests a net gain of 210,000 new residents moving to New Zealand between 2023 and 2025. Auckland Council’s Economic Development Plan 2021 indicates that 50% of New Zealand’s inward migration settles in Auckland.

The property has three road frontages and is behind only Commercial Bay in the list of Queen Street’s biggest sites.

Several successful redevelopments and change of use projects have been completed in the immediate locality; including an office building conversion at 500 Queen Street into the Mercure Hotel and the redevelopment of the former Civic Building into The CAB luxury apartments. The addition of the Pinnacle Tower to the Cordis Hotel and the conversion of an office tower into the Sheraton Four Points hotel provides further evidence of the increased investment activity around the midtown/uptown district in recent years, Ross adds.