Big sale expected to spark global interest
The spectacular foyer in Building D within the Spark City office complex at 167 Victoria St West.
One of the four central Auckland buildings in the Spark City office complex, with a 300 person function venue and theatre for training, staff events and briefings is being marketed for sale publicly for the first time with an asking price of $72,800,000.
The 7592 sq m six level building Building D, at 167 Victoria St West, on the corner of Victoria St and Hardinge St, is fully occupied by NZX listed Spark New Zealand Limited on a 10 year lease from June 1, 2014.
Paul Hain of Bayleys Auckland has a sole agency to market the property which is for sale by deadline private treaty closing on April 30 unless it sells beforehand by negotiation.
Hain says Building D is a pivotal component of Spark’s head office complex as it contains the main meeting place for Spark’s staff and stakeholders.
The building is part of a premium grade campus-style office development that was purpose built by Mansons TCLM Ltd for New Zealand’s largest telecommunications company – then Telecom New Zealand – and completed in 2010. Three of the buildings are leased by Spark, with Television New Zealand now leasing the remaining building.
A unit title subdivision of the development was completed last year to create separate freehold unit titles for each of the four buildings that are linked by a giant central atrium.
Hain says the way that Mansons TCLM has structured Spark’s lease makes the property very appealing to investors. “There is a built-in annual rent increase of three per cent amounting to a substantial lift in the revenue over the period of the lease and, at the moment, is significantly ahead of the inflation rate. Mansons also provides a 10 year defects and capital expenditure warranty meaning the new owner faces no irrecoverable outgoings until at least 2024.”
Spark’s lease on Building D, which includes underground parking for 75 cars, is currently producing net annual rental income of about $4,920,000. The next increase, due in November this year, will increase the building’s net rent to around $5,067,000. The company has two six-year rights of renewal which, if exercised, would take the lease’s final expiry through until May 2036.
“At over nine years, the building provides one of the longest weighted average lease terms (WALTs) in the Auckland CBD,” says Hain.
He says Spark City is one of the most modern and highly specified office building complexes in New Zealand and has an A-plus seismic assessment, with a rating of over 100 per cent of New Building Standard (NBS). With architectural design by Architectus and interior design by Warren and Mahoney and Geyer Australia, the building has the latest in building services and technology and has achieved a Five Star office design and built certifications from the New Zealand Green Building Council.
Building D occupies a CBD site on the corner of Victoria St and Hardinge St.
“Unlike most buildings which only achieve a design certification, Spark City has also achieved a Five Green Star built rating, certifying that it was not only designed but also built to Five Star Green requirements. Research is beginning to quantify the occupational benefits and enhanced returns of sustainable and healthy buildings which are driving demand for such assets from both tenants and investors.
“In a world in which sustainability is of growing importance, green buildings are a way of reducing investment risk through improved liquidity, decreased obsolescence and better tenant retention prospects.”
Hain says Building D has floor areas of about 1100 sq m to 1400 sq m, the majority of which are column free and provide excellent levels of natural light. “Level 2 links to the striking communal plaza which provides a spectacular foyer and meeting point for staff and clients and also offers cafes and eateries. Beneath this level is the basement car parking which provides an excellent ratio of approximately one park per 100 sq m of net lettable office area.”
Hain says Building D has a prime corner position with a substantial frontage onto Victoria Street West. It is situated on the progressive western side of the Auckland CBD within an area known as Victoria Quarter which is popular with tenants favouring large floor areas in low to mid rise buildings. “There has been substantial office development activity in the area in recent times..” Across Hardinge St at 151 Victoria St West, construction is nearing completion on Mansons’ latest office project in which half of the available 18,600 sq m of space has already been leased to anchor tenant New Zealand Media and Entertainment (NZME.) while work is also well advanced Fonterra’s new head office on nearby Fanshawe Street.
“There are a number of other big name tenants located in the surrounding area such as TVNZ, Oracle, Vodafone, KPMG, Microsoft, NZI, Kiwibank and Courier Post,” Hain says.
“And the location is within easy reach of the major public transport and motorway links, the city centre, the waterfront and Victoria Park, with high quality amenities on-site and nearby, including a Les Mills gym.”
“This is a globally saleable commercial asset of the highest quality and is the ultimate passive investment for large investors in a market where there are likely to be few offerings of this calibre this year,” says Hain
Paul Hain of Bayleys Auckland.