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AUCKLAND, 29 JANUARY 2009 - Swanson Towers in Swanson Street is being offered for sale by Jones Lang LaSalle, representing a rare opportunity for an astute investor seeking a strategic position in the heart of the Auckland CBD. The freehold property, which currently comprises 3 office towers on a land area of approx 1,724m2 with an internal floor area of approx 6,151m2, is located on the corner of Swanson, Hobson and Federal Streets and is being sold by private treaty. Expressions of interest are sought by Friday 20th February.
The innovative “ value add” redevelopment proposal, which is based on plans provided by Clark Brown Architects, comprises a mixed use development including a 3 / 4 star hotel of approx 196 rooms together with a refurbished office building. The hotel will be located within the largest 11 storey building and will connect through to the adjacent 3 level building by way of a stepped configuration, with entrances from both Hobson and Swanson Streets and basement parking below. The third building on the site is a mid rise C grade office tower and this could be refurbished to target B grade CBD office tenants or utilised for other uses such as residential or future expansion of the hotel.
Despite the anticipated slow down in the tourism sector over the next 12 months, the Auckland CBD hotel market remains the most sought after investment market in New Zealand with 3 to 5 star hotels currently performing between 70% -80% occupancy. Commenting on the proposed development, Dean Humphries, National Director of Investment Sales / Advisory at Jones Lang LaSalle Hotels, says, “Auckland remains the number one destination for international and domestic travellers within New Zealand, with additional attractions such as the cruise ship industry and Vector Arena providing further stimulus to the City. More importantly this hotel can be opened by the 2011 Rugby World Cup, which will provide an investor significant revenue in their first year of operation. Given how tightly held the Auckland hotel market is and the fact that there is likely to be very little new supply of hotels coming on stream in the short to medium term, we are sure there will be significant interest in the site. There are a large number of international hotel operators who are keen to be in Auckland CBD, so investors have a wide choice of operators to work with.”
“Swanson Street is one of the best locations to build a new hotel in Auckland CBD – close to the waterfront and in the favoured western CBD hotel precinct, which includes The Stamford, Heritage, Rydges, Grand Chancellor, Copthorne and Sebel. The site lends itself perfectly to a hotel conversion, as the existing buildings are perfectly suited to ensure maximum floor efficiency together with great access, exposure and outstanding views,” continued Humphries.The site has the major benefit of offering instant holding income from parking, signage and leasing of lower grade office space. There are a number of existing office tenants in place, with six month demolition clauses in place to allow for future redevelopment. Nick Hargreaves, Jones Lang LaSalle’s National Agency Director, comments, “The beauty of this site from an investment perspective is its flexibility. It could be held as one parcel or split up and developed in components. The flexibility of a mixed-use development is increasingly attractive to investors and we now commonly see developments combining hotels with commercial, residential and retail use. There are very few freehold sites that would lend itself to this type of development within this preferred part of the CBD. We have looked at all the options available to an investor and all the preliminary work we have done indicates that this is the best use for the site.”
Clark Brown Architects have worked through a number of plans to come up with the best design for the site. The proposed hotel will have 196 rooms of 22.5m2, laid out over 11 floors. There will also be approx 300m2 of food and beverage space on the ground floor together with some conferencing areas on level 1. Commenting on the site, Paul Brown, Architect, says, “The existing building shape and configuration is ideal for a hotel conversion. Structural reports indicate that the building has a sound structure which will allow for redevelopment including infilling and / or adding extra floors without significant expenditure on the core structure itself. The challenge has been to come up with a design that meshes two disparate buildings, creating a harmonious and attractive exterior facade.”
Jones Lang LaSalle and Clark Brown have worked closely with Hawkins Construction to ensure the feasibility of the project. Commenting on this, Ron Macdonald of Hawkins says, “The hotel is designed to a 22.5m2 per room model and expects a hotel can be delivered well below $160,000 per key inclusive of land and FF&Ey. Based on our experience working on the Ibis Hotel in Christchurch, we are confident that this is the best model and that it has been priced realistically.“
The site is zoned Strategic Management Area (SMA) 1 of the Auckland City Central Area District Plan 2005.