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Large refurbished office asset in Symonds Street on the market

A nearly fully-occupied dual office tower on Auckland’s Symonds Street ridge with an existing strong income profile, and optional future redevelopment options given the design and location of the building, has come to the market for sale.

Built in 1985 and undergoing substantial refurbishment works from 2021 onwards, the prominent building on a freehold 1,852 site at 110 Symonds Street has 10 commercial office levels plus three basement carparking levels. There is a total 8,846 floor area across the two towers, and 175 car parks.

Recent works include three new lifts, an amenity upgrade to all levels including end-of-trip facilities, upgraded lobbies, sprinklers, HVAC, LED lighting and security, plus a new gymnasium on the ground floor. The asset has an assessed seismic rating of 67% NBS.

The property is 93 percent occupied with 27 office business tenants on varying lease terms, a passing net income of $2,713,780 per annum, and an estimated fully-leased net income, with vacancy underwrites, of $3,107,167 per annum.

Agents handling the sale say there are very few mid-market office investment properties with positive cashflows for sale in Auckland. The property also offers future rental upside given that the current average office rental across the asset of $275 per sqm sits in the lower band for a building of this calibre and location in today’s market.

Layne Harwood, Tommy Zhang and Ian Hall of Bayleys are marketing the city fringe property via an expressions of interest campaign closing 24th April, unless sold prior.

The shorter weighted average lease term across the asset will enable continued floor upgrades to be made, to meet occupier demand for higher quality office accommodation, says Harwood.

“The building has wide appeal across occupier groups and it resonates with tenants who like the location due to streamlined motorway and arterial access, and who enjoy working in a quality building at a modest rental.

“This is demonstrated by the strong take up of refurbished space over the last two years with occupiers finding the building offers a sound value proposition and a relatively high level of amenity given its age.

‘This is undoubtedly one of the best office buildings on the Symonds Street ridge, given its prominence and overall condition and presentation, and it competes extremely well as a very functional and good-looking B-grade asset.”

Given the location beside the motorway interchange at Grafton, just 10 minutes from the CBD and handy to the new Karanga-a-Hape railway station under construction in Mercury Lane as part of the City Rail Link project, the property has sound underlying fundamentals for the attraction and retention of staff.

While performing well for an asset of its class and location with an attractive yield and expected rental growth, the favourable carparking ratio also sets it apart in the market and will help underpin any future redevelopment options if the asset is moved away from the office asset class.

The Business-City Centre zoning supports a future change of use with potential for mixed-use commercial/residential, hotel accommodation, student accommodation, co-living space or a build-to-rent facility.

Zhang says with international student numbers rebounding and The University of Auckland and AUT’s city campuses close to the subject property, the potential for conversion to student accommodation could make sense in time.

“But equally, conversion to co-living with some communal amenities, or to a hotel could also be viable with an example being the ex-Bayleys House office building in the Viaduct that was converted to the upmarket QT Auckland hotel in 2020.”

Two recent hotel initiatives in the Symonds Street catchment support growth in the commercial accommodation market, with the extended Cordis across the road, and the 289-room Abstract Hotel on Upper Queen Street enjoying good occupancy.

Click here for more information on the listing.

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