Sloping in the right direction
A 10 level freehold office building known for its distinctive sloping profile in the heart of the city and in the Art Gallery precinct has been put on the market offering investors a chance to buy into a strategic CBD location.
“Fully leased this property at 10-14 Lorne St is capable of earning about $1.3 million net per annum based on an average office rental of $225 per sq m,” says Andrew Bruce of NAI Harcourts who, with colleague Nicolas Ching and Bruce Whillans and Henry Thompson of Ray White Commercial, is offering it for sale by tender closing at 4 pm on Thursday September 18 unless it sells beforehand.
Originally built for National Mutual in the 1970s, the building comprises a total lettable area of 5121 sq m across nine office floors and four ground floor retail tenancies. The reinforced concrete building rises from a four level base and begins to taper from the fifth floor, giving it its characteristic sloping profile.
“The property has a robust A Grade seismic rating and recently underwent a significant refurbishment,” Bruce says.
The ground floor is fully occupied by four established retailers and generates $311,849 per annum gross in rent. The building has an excellent street presence, with 32 metres of retail frontage.
Bruce says the property would provide a stable holding income while a new owner decided on how to best use it.
Re-leasing the office floors would take advantage of a current shortage of CBD office space and forecast rental growth over the medium term.
There was also the potential to convert the office floors to residential. Under the current district plan the site has a maximum floor area ratio (FAR) of 10 to 1 providing room for growth with the potential for a total gross floor area of 7660 sq m.
Additionally, investors could look to capitalise on the performance of the hotel market, which was experiencing its highest occupancy rate in years of around 80 per cent.
“The location of 10-14 Lorne Street and its closeness to the University of Auckland, AUT and the civic entertainment precinct make this property ideal for a serviced apartment and/or four star hotel operator,” Bruce says.
The property is zoned as a Strategic Management Area with permitted activities including accommodation, education, entertainment, retail, services, office and food and beverage.
Access to the office building is gained off Lorne Street with a double height foyer leading to two sets of lifts at the rear of the lobby. The building’s core is located on the easternmost boundary of the property and delivers open plan floors with large windows overlooking Lorne Street. The office floors have suspended ceiling tiles with recessed fluorescent lighting and power points around the perimeter wall. Level 9 features an unusual semi enclosed roof garden providing an attractive outdoor entertainment area.
The office floors have been refurbished with new carpet tiles and painting throughout. The lobby refurbishment includes new feature light fittings and a complete repaint.
Each level is provided with male and female toilet facilities, heating, ventilation, air conditioningand fire sprinklers.
Bruce says the property holds a prime position on the eastern side of Lorne Street, one of the most sought after locations in Central Auckland. Surrounded by a mix of upmarket apartments, cafes, restaurants and boutique fashion stores, Lorne Street is regarded as Auckland’s Art Gallery Precinct with the Auckland Art Gallery and several well-known galleries located within the immediate area.
Lorne Street has a high level of connectivity with Queen St via two through-site pedestrian links at 246 Queen Street, directly opposite the property, and 280 Queen Street, 50 metre south on Lorne Street.
The immediate area has become a major retail destination for university students, with a new Top Shop and Cotton On Mega Store set to open nearby. The completion of ‘X-Gallery’ on the corner of Khartoum Place and Lorne Street has also boosted pedestrian numbers and has enhanced the retail offering on Lorne Street.
Henry Thompson of Ray White Commercial says the opportunity to secure similar freehold, standalone properties in the heart of the CBD are exceptionally rare.
“There are many possibilities for future use, whether it be to lease as office space or the significant scope there is for apartment, hotel or serviced apartment conversion. This represents an excellent value-add opportunity to acquire and reposition this special building,” Thompson says.