Towers of power, and future opportunities
A nearly fully-occupied, dual office tower on Auckland’s Symonds St ridge with a strong existing income profile and future redevelopment options has come to the market.
Built in 1985 and undergoing substantial refurbishment from 2021 on, the prominent building on a freehold 1852sq m site at 110 Symonds St has 10 commercial office levels plus three basement carparking levels. There is a total 8846sq m floor area across the two towers, and 175 carparks.
Recent works include three new lifts, an amenity upgrade to all levels including end-of-trip facilities, upgraded lobbies, sprinklers, HVAC, LED lighting and security, plus a new gymnasium on the ground floor. The asset has an assessed seismic rating of 67 per cent NBS.
The property is 93 per cent occupied with 27 office tenants on varying lease terms, a passing net annual income of $2,713,780 and an estimated fully-leased net annual income, with vacancy underwrites, of $3,107,167.
Agents handling the sale say there are very few mid-market office investment properties with positive cashflows for sale in Auckland.
The property also offers future rental upside, given that the current average office rental across the asset of $275 per sq m sits in the lower band for a building of this calibre and location in today’s market.
Layne Harwood, Tommy Zhang and Ian Hall of Bayleys are marketing the cityfringe property via an expressions of interest campaign closing Wednesday April 24, unless sold prior.
Harwood says the shorter weighted average lease term across the asset will enable continued floor upgrades to be made to meet occupier demand for higher quality office accommodation.
“The building has wide appeal across occupier groups and it resonates with tenants who like the location due to streamlined motorway and arterial access, and who enjoy working in a quality building at a modest rental.
“This is demonstrated by the strong take-up of refurbished space over the last two years with occupiers finding the building offers a sound value proposition and a relatively high level of amenity given its age.
“This is undoubtedly one of the best office buildings on the Symonds St ridge, given its prominence and overall condition and presentation, and it competes extremely well as a very functional and good-looking B-grade asset,” he says.
Given the location beside the motorway interchange at Grafton, just 10 minutes from the CBD and handy to the new Karanga-a-Hape railway station under construction in Mercury Lane as part of the City Rail Link project, the property has sound underlying fundamentals for the attraction and retention of staff.
While performing well for an asset of its class and location with an attractive yield and expected rental growth, the favourable carparking ratio also sets it apart in the market and will help underpin any future redevelopment options if the property is moved away from the office asset class.
Its Business—City Centre zoning supports a future change of use with potential for mixed-use commercial and residential, hotel accommodation, student accommodation, co-living space or a build-to-rent facility.
Zhang says with international student numbers rebounding and the University of Auckland and AUT’s city campuses close to the property, the potential for conversion to student accommodation could make sense in time.
“But equally, conversion to co-living with some communal amenities or to a hotel could also be viable, with an example being the ex-Bayleys House office building in the Viaduct that was converted to the upmarket QT Auckland Hotel in 2020.”
Zhang says two recent hotel initiatives in the Symonds St catchment support growth in the commercial accommodation market.
The extended Cordis across the road and the 289-room Abstract Hotel on Upper Queen St are enjoying good occupancy.