Wellington CBD building with capital tenants
The four-level building occupies a large site at 15 Walter St, in central Wellington. Photo / Supplied
The sale of a four-level building on a large freehold landholding in central Wellington is being billed as “representing a significant investment opportunity” on a market where office vacancy rates are low and the demand is high.
“The property has eight high-calibre tenants providing a strong and diversified income,” says Sam McIlroy of Colliers International who, with colleague Peter Wilkin, is marketing 15 Walter St for sale by deadline private treaty closing on May 18.
“The seismically-strengthened building was upgraded to 100 per cent of new building standard in 2015, and includes Mediaworks, the Greater Wellington Regional Council and Vero, among its tenants,” McIlroy says.
“These factors mean the property will have strong appeal for commercial property investors in Wellington and around the country,” he says.
Wilkin says the Wellington CBD office vacancy rate is now at a record low and this is causing the investment market in the sector to heat up.
“Tenant demand is high for the little remaining office space in central Wellington following the November 2016 earthquake. This dynamic is causing rents to rise and is attracting more investors to the office sector.”
The 6400sq m building was originally constructed in 1988 and provides three levels of office space, a ground floor showroom, warehouse and 80 car parks. It has a good leasing history and provides strong cash flow with a net income of $1,278,530 per annum, says McIlroy.
“This property has been able to attract and retain good quality tenants, due to its location and high seismic strength rating. Staff working here love the location close to the cafes, restaurants, bars and shops of Cuba St.”
The building’s occupiers provide a strong cashflow with investment risk spread across the multiple tenancies, Wilkin says. The property also offers a substantial site of 3359sq m in the central city.
“Given the dynamics of the Wellington office market and the fast-changing nature of the popular Te Aro precinct, this property will be considered a strategic land holding by many buyers with long-term future development potential in mind. Many office buildings in Te Aro have been converted to mixed-use apartment and retail use in recent years and this trend is continuing.”
Colliers’ survey of the Wellington CBD office market in January 2017 showed that total office space had reduced by nearly 100,000sq m and vacant space had reduced by 46,200sq m following the November 2016 earthquake. “This represents a severe shortage of available space,” says McIlroy.
“Vacancy has decreased in the Te Aro office market due to the relocation of local businesses affected by the earthquake, as well as the conversion of several office buildings into residential accommodation. New apartment developments have also helped make Te Aro a fast-changing location to live and work.”
Sam McIlroy, Colliers International