Prominent central-city retail and office block for sale

A large retail and office block located on the corner of one of Auckland’s busiest intersections - in the heart of the central business district - has been placed on the market for sale.

The multi-tenanted property at 203 Queen Street consists of a 15-level building on 802 square metres of freehold land - with international cosmetics chain Mecca occupying the basement, ground floor and mezzanine level retail space, with 12 floors of office space sitting above. Three of those floors are tenanted by nationwide gymnasium operator CityFitness.

The building constructed in 1964, is typical of the era – comprising concrete columns and beams, concrete floors, with partial stone cladding. Each of the office floors contains approximately 633 square metres – which combined, provides an overall net lettable area of 8,550 square metres. Sitting on an axis location, 203 Queen Street has a 24 metre frontage onto Queen Street and a 36 metre frontage onto Victoria Street.

Originally built as the head office for the ANZ Banking Corporation, the property has been upgraded and partially refitted during the mid-1990’s, 2005, 2015 and 2018. The notable 2005 refurbishment at a cost of $17 million saw the installation of modified lift cars, floor and ceiling modifications, new amenities, and the upgrade of the air conditioning system. The latest improvements have been completed on the retail level.

203 Queen Street is now being marketed for sale by private treaty through Bayleys Auckland, with offers closing at 4pm on November 14. Brokers David Bayley and Layne Harwood said the building had an A+ seismic classification and an NBS rating of 119 percent.

“The property in its current configuration generates a total net passing rental income of $3,095,000 per annum, with a forecast total net income of $3,520,000 per annum, when fully tenanted,” Mr Bayley said.

Australian-based Mecca is one of Australasia’s largest cosmetic brands – selling the full range of make-up, skin care, fragrance and hair care products. Mecca is on a lease running through to 2024, with two further five-year rights of renewal. British retail giant Topshop occupied the retail space for space for several years after opening in 2015, before assigning its lease to Mecca, which began trading last month.

Gymnasium operator tenant CityFitness oversees 27 sites around New Zealand. The corporate-owned model operates around the clock and has some 50,000 members. It is on a lease that runs through to 2021, with a further 10-year right of renewal.

Other office tenants include:
• Language interpretation company Pacific International Translations
• Immigration advisory and international tourism investment consultancy Golden Forest International
• Financial planning and wealth-management advisory Global Village
• Investment management company Caliber Investment
• Immigration advisory company Go 4 NZ
• Foreign exchange broking house Formax International
• Business planning and litigation evidence research firm Sapere Research
• New Zealand Transport Agency
• Legal firm Queen City Law
• Accountancy firm Moore Stephens Markhams
• Data and IT analysis company IDC New Zealand
and
• Tax reporting and estate planning advisors Amicorp New Zealand

Mr Harwood said 203 Queen Street’s tenancy schedule was split across multiple use types – with 62 percent of the building occupied by office tenants, 22 percent taken up by CityFitness Gym, and 16 percent occupied by Mecca’s retail use. Combined, the tenancies had a weighted average leasing term of approximately 4.5 years.

While the building was constructed in 1964 and rated to be in good condition due to substantial refurbishment over the years, the premises were prime for further upgrading, befitting its position in the very heart of Auckland’s premier retail street.

“The new City Rail Link Aotea Station on Victoria, Wellesley and Albert Streets will change the dynamic and appeal for this location considerably,” Mr Harwood said.

“The Mecca fit out undertaken this year is of a very high quality and enhances the building’s retail presence significantly, similar standards could be achieved relatively easily with the upper levels – which would enhance rental levels considerably. There is certainly an add value opportunity.”

Mr Bayley said: “Very rarely do properties of this size and location come up for sale. In fact, there have only been two sales in the last 18 months of Queen Street office buildings which sold for more than $50 million.”

“Those two sales have been 205 Queen Street which sold for $174 million, and the heritage building at 131 Queen Street which sold for $52.3 million.”

© Scoop Media