CBD apartments’ character appeal

5:00 AM Saturday June 25, 2016 Paul Charman

The high profile site at 7-9 Union Street has exposure to around 120,000 cars per day.

A fully leased CBD block containing a mix of commercial tenancies and 10 New York style apartments is for sale.

The refurbished character building, on the corner of Union St and Nelson St in central Auckland, returns a net annual rental income of about $576,500.

The high profile 886sq m site at 7-9 Union St is located on a major inner city intersection which provides massive exposure to around 120,000 cars per day, says Alan Haydock, manager of Bayleys City & Fringe team.

Haydock is marketing the property with Damien Bullick.

Featured in Bayleys’ latest Total Property portfolio, it is up for tender, closing July 5, unless sold earlier by negotiation.

“The property offers a substantial, diversified cash flow from two separate buildings along with the scope for more intensive development of the site given its corner position and the fact that it is surrounded by high rise apartment buildings,” says Haydock.

The main 1371sq m three-storey building at 9 Union St sits at the rear of the site and has frontages onto both Nelson and Union Streets.

It has been strata titled into three units with two office tenancies on the ground floor on one title and 10 apartments, five per floor, above on the other two.

The building was refurbished in 2014 and the residential units have an excellent leasing history because most come with secure parking and are large for the central city, says Haydock.

Collectively known as the IconiCity apartments, they range in size from 53sq m with one bedroom to 163sq m with four bedrooms including a loft.

They have modern kitchen and bathroom fixtures and fittings and are individually alarmed.

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Apartments boast high-stud with exposed beams and building services and exposed brick walling in parts.

“While there is a lot of talk about ‘New York’ style apartments, these deserve comparison,” says Haydock.

“They are in an early 1900s’ character building with high stud ceilings and also feature exposed brick walls and beams, polished concrete floors and four of them have additional loft living and or sleeping space on a mezzanine floor.

“A lot of thought and empathy went into designing these contemporary apartments to appeal to people working and living in the city, while retaining the character of the building. It has proved to be a very successful concept.

“There could be potential to unit title them on an apartment by apartment basis and perhaps sell them off individually at some stage in the future, but given rising apartment rentals in the CBD they are currently contributing a substantial and increasing cash flow,” says Haydock.

On the ground floor of this building long standing tenant Cook Brothers Construction occupies about 236sq m of character space. The company has exercised a final three-year right of renewal in mid 2014. Its main entry from Nelson Street leads into a reception area and behind this is a large open plan work area, plus a modern kitchen, bathroom facilities and a boardroom.

Business consultancy Blacksmith Ltd occupies the remaining 128sq m of the ground floor, also on a three-year lease.

This is also an open plan office area with a mixture of glass partitioning.

Both tenancies have character appeal, says Bullick, including a high-stud with exposed beams and building services and exposed brick walling in parts.

The smaller, single-level building at 7 Union St, also built in the early 1900s, is on another fee simple title.

It has a single retail tenant, trading as a convenience store, which draws many of its customers from surrounding apartment buildings and has recently renewed its lease for six years, although there is a termination clause.

Its 98sq m of space includes kitchen facilities and a bathroom with shower.

Because of its high profile position, the site also benefits from significant signage income, says Bullick, with a seven year lease in place to APN Outdoor from April 2011.

Bullick says the property is an ideal investment opportunity with the income split between residential, office, retail and signage tenancies.

“The site presents itself as a potential development or land banking option with the right to build a high rise apartment block on it.

“There is also the spare land at the front, currently used for carparking which could possibly be reconfigured to construct another building.

“However, while the property is underdeveloped, it is providing a good income in the meantime,” he says.