Auckland’s Twin Towers go on market
Known locally as the Twin Towers, one of Auckland city’s largest and most recognisable office and retail properties has come up for sale at 205 Queen St.
“This is a landmark A-grade complex with a diversified income stream in Auckland’s busiest commercial precinct,” says Brent McGregor, senior managing director of CBRE New Zealand, who is marketing it with colleagues Warren Hutt and Mark Maginness via an international expressions of interest process with submissions closing at 4pm on Thursday June 1.
“We expect this prominent property, which occupies one of only two island sites on Queen St, will be a significant attraction to investors in New Zealand and internationally,” McGregor says.
“It’s a magnificent asset for a number of reasons. Firstly, A-grade CBD Auckland office towers don’t come on the market very often. In fact, over the past 10 years only six or seven prime core CBD office towers have been sold including: the Lumley Centre on Shortland St, the Deloitte Centre at 80 Queen St, the SAP Tower at 151 Queen St, HSBC House at 1 Queen St, Auckland Council’s offices at 135 Albert St, and the AIG building on Shortland St. This is less than one per year, and reflects the sought-after nature of major prime CBD properties.
“Secondly, 205 Queen St is located at one of the busiest Auckland CBD intersections and will further benefit by Auckland Council’s heavy investment in improving the 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 almost fully occupied asset offers, means its new owner stands to reap many long-term benefits.”
Built in 1990, the property comprises two office towers with two podium retail levels, atrium and basement parking for 125 cars on a 3764sq m city block site. Tower 1 has 17 office levels, and Tower 2 has 22 office levels.
McGregor says the property is one of the few CBD buildings in New Zealand with a four-star National Australian Built Environment Rating System (Nabers NZ) energy rating and a five-star Green Star design rating. It also has a strong seismic rating of 133 per cent of the current New Building Standard (NBS).
Hutt says that the property features 585sq m office floorplates which are perfectly sized for the Auckland office occupier market.
“Eighty-four per cent of all leasing deals in our market are below 600sq m,” he says. “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 says the building has been exceptionally well managed by Kiwi Property Group and has received several upgrades since its construction; with Tower 1 significantly refurbished in 2013.
The total net lettable area of 25,381sq m is currently 95 per cent occupied on a 3.9 year weighted average lease term (WALT) with 30 per cent of the building’s current annual net passing income of $10,679,760 coming from retail tenancies and the remainder from office occupiers.
Among the best-known retail tenants are: ANZ’s flagship NZ retail branch, The Flight Centre, The Body Shop, Domino’s Pizza and Gloria Jeans. In office levels above them major tenants include DLA Piper, Kiwi Property Group, The Reserve Bank of New Zealand, the Bank of China, Allianz, and Brookfields.
Maginness says the property is underpinned by a number of strong lease covenants. “It has an attractive tenancy and expiry profile, with a diverse spread of income, expiry dates and industry types, that will create a confidence around the security of present and future income. Moreover, the majority of the leases include fixed rental growth provisions.”
Hutt says the property occupies a prime island site with four street frontages including the corner of Queen St and Victoria St.
“It has some of the highest volumes of pedestrian traffic in New Zealand with amenities in the surrounding area including shopping, entertainment, art galleries, acclaimed dining establishments and a casino.
“Queen St has been significantly enhanced as the city’s premier retail and commercial thoroughfare, with Auckland Council committing significant investment into shared streetscape – of which 205 Queen St has been a major beneficiary through the upgrade of the Darby St and Elliott St frontages.”
He adds that 205 Queen St also stands to benefit from future infrastructure projects like the City Rail Link. “The proposed Aotea Station is presently under construction and due to open in 2023. It will have nearby access from Victoria St; effectively on the doorstep of this property.”
Hutt says long-term ownership of prime grade CBD towers, a lack of stamp duty in New Zealand, and the fact that there is unlikely to be another high-rise tower of a similar scale on the market for many years; is expected to create high local and international interest in the sale.