An Auckland Council service centre in the CBD attracts $58 million offer

Wednesday, 8 May 2019

Auckland Council has a conditional offer of $58m for its four-storey service centre at 35 Graham Street in the Victoria Quarter.

Auckland Council has an offer of $58 million for its service centre at 35 Graham Street in the central city, the most valuable of seven properties it has put on the block.

The decision to sell the properties with a combined value of around $150m was taken almost a year ago with some buildings to be sold from legacy councils raising opposition, though the vote to sell the buildings was decisive with 13 councillors supporting it and four against.

The Graham Street service centre has a 2017 capital value of $52m and is one of several service centre buildings up for sale following the amalgamation of councils into one Auckland-wide territorial authority.

Small property company Asset Plus has made the conditional $58m offer for the four-storey building with a lettable area of 9900 square metres, on a elevated site of more than one acre of freehold land in the Victoria Quarter, to the west of the central city and overlooking the extensively redeveloped Wynyard Quarter.

Mark Francis managing director of Augusta said the development potential of 35 Graham Street ranged from a minor refurbishment through to adding up to three more floors.

* Auckland Council approves sale of seven properties, despite opposition

* 'Lack of thought' delays sale of $190m of Auckland Council property**

The deal requires the backing of Asset Plus shareholders and they are expected to vote on it in the first two weeks of June, the company said.

It was drawn to the property's redevelopment potential. It had large floor plates of 3000sqm to 3500sqm attractive to corporates while another two or three levels of A-grade office space could be added.

The council occupies the whole building and will lease it back from the new owner for two years as part of the sale and purchase agreement.

Augusta, with 19 per cent of the shares of Asset Plus, manages its properties.

Augusta managing director Mark Francis said Asset Plus's strategy was to buy buildings it could add value to and hold, though that was not a hard and fast rule.

The Graham Street Service centre has 2017 capital value of $52m.

With 35 Graham Street the options ranged from a minor refurbishment through to building three more floors and a full refurbishment of the building.

Asset Plus was leaning towards the major extension and refurbishment, Francis said.

The cost would be significant for the latter but it was too early to give estimates. That information would be provided to Asset Plus shareholders before they voted.

The property in the CBD was unique in that it had large floor plates as well as great views from the upper floors over the Waitemata Harbour, Francis said.

A major extension and renovation would take 15 months to complete. While the council continued to occupy the building for two years Asset Plus would have the time to design, plan and cost a building development and be prepared to start when the council moved out, he said.

CBRE, the agents selling the property for the council, said the building was built in 1997 and incorporated the original foundations and a small area of supporting heritage structure and mosaic artwork of the BJ Ball building that was previously on the site.

The building had a rental value of $3.97m a year plus gst.

Opportunities included refurbishing the current office space to achieve greater rental growth, as well as adding up to a further 8,580sqm of floor area.

CBRE agent Mark Maginness said about 2500sqm of the building was in the basement and being used as storage by the council. That could be converted into 76 car parks.

The Victoria Quarter had changed significantly over the past decade with several new office developments accommodating the likes of the telco provider Spark and media network NZME.