Big tenanted Dunedin city property

12:51 PM Thursday December 1, 2016 Colin Taylor

The two 1950s buildings are for sale at 360 Cumberland St, Dunedin.

A Dunedin 1950s' former supermarket complex with long-term tenants and fitted out for office use - along with a car parking building occupied by Wilsons Parking - are being marketed as a freehold investment prospect.

The office space provides a total lettable area of about 4900sq m and the parking building provides 270 spaces. The property occupies an 8088sq m corner site and is in 13 titles.

"Both the buildings have been seismically assessed to at least 100 per cent of the New Building Standard [NBS]," says JLL agent Chris Harding who is selling 360 Cumberland St by open tender closing on Monday, December 19.

The office building is occupied by Otago Polytech and the Ministry of Social Development. The two-level carparking building is partially leased to the office tenants and the remaining 209 spaces are leased by Wilson Car Parking.

All three of these occupiers are on nine-year leases which commenced in April 2013.

Each has two rights of renewal of three years, with a final expiry date of March 2028.

"In a time of uncertainty for many parts of the country, where investors in other cities are having difficulty securing funds and insurance, these buildings represent a solid investment opportunity," Harding says.

"This is a rare opportunity to invest in a big tenanted investment property with future development potential in Dunedin's CBD. Under the current District Plan the site is zoned Large Scale Retail but Dunedin City Council is currently in the hearings' phase for its Second-Generation District Plan and will release its decisions next year.

"When that plan becomes operative, it may even be possible to make use of the airspace above and take this building up to three stories in height, as the site is in the CBD Edge Commercial zone with a proposed height limit of 16 metres."

He says the Ministry of Social Development has committed significant funds on fitting out this building, indicating their commitment to this location.

"The property is currently generating income of more than $1 million per annum for the owner," Harding says. "It could be an ideal opportunity for small or large scale syndication, or perhaps investment by family trusts, high net worth individuals or funds."

"The building has three street frontages, on Cumberland, Castle and St Andrew Streets, which means it has excellent exposure to passing traffic. This is a premium location, just moments away from the Octagon and the Town Hall.

"It's a busy part of town in terms of passing foot traffic, as it is right next to the University of Otago, which leads the way in terms of the education performance of its 20,000 students. The property is also right beside Dunedin Hospital, which employs 3000 staff, and a short walk from the shopping areas in George Street. Cadbury World, one of Dunedin's most popular tourist attractions, is next door at 280 Cumberland Street and there is a Countdown supermarket at 309 Cumberland Street."

Dunedin is the second largest metropolitan area in the South Island of New Zealand after Christchurch, with the local economy being driven by the University of Otago and the rural distribution sector.

Harding says it is a compact city with a population of more than 127,000. "Residents benefit from some of the most affordable housing in the country and rate the sense of community their city offers. In the 2014 Quality of Life Survey, 84 per cent of Dunedin residents surveyed felt they had a positive overall quality of life. The City Council says the average travel time from key suburbs to the city at peak times is less than 15 minutes and city also has more green space per person than any other city in New Zealand."

"According to Statistics New Zealand, Dunedin is a youthful city, where 70.7 per cent of the population are of working age (15-64). That compares to 66.1 per cent of New Zealand's total population being of working age.

"Tourism is increasingly making a significant contribution to Dunedin's economy. For the year ending June 2016, the total guest nights rose by 4.3 per cent when compared with the previous year. By comparison, the total guest nights for New Zealand as a whole went up by 5.8 per cent."