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New Zealand

Prime chance to put your name up in lights

New Zealand Herald Article



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

NEW ZEALAND, 5 JUNE 2010 – Office space is being offered for sub-lease in the award-winning, architecturally-designed, waterfront building at 139 Quay St, which once housed the commercial operations of Ports of Auckland.

Constructed in 1984, the distinctive building is one of a select few office buildings situated on the northern side of Quay St on Auckland's Princes Wharf, says John Church, director of leasing at Jones Lang LaSalle, who is co-ordinating the marketing campaign.

"This is an office accommodation solution that provides prospective occupiers with an absolute waterfront position that is hard to match.

"It is arguably one of the best deals in Auckland CBD's office market," Church says.

"The building is truly unique with balconies on two of the floors surrounding the entire floor, providing unequivocal 360 degree views of Auckland's CBD and waterfront."

Originally, ING planned to move into the premises to occupy around 6000sq m of space across four levels, featuring unobstructed views of Auckland's inner harbour.

However, a change in strategy has resulted in the office accommodation being offered as sub-lease space.

"The potential to secure premises that are differentiated from the competition in terms of position, quality and cost is expected to attract significant attention from a wide range of office occupiers," says Church.

He says that, while the building is around 25 years old, all available floors have been extensively refurbished to provide its new occupants with the latest in office accommodation requirements. The programme, completed in September 2009, includes a new ceiling, new floor coverings, double glazing fitted on levels 7 and 8, and a number of other green star initiatives, including energy efficient lighting and new air-conditioning systems.

The upgrade to the building has also seen a 120sq m floor added to the top, thereby increasing the net lettable area to just over 10,000sq m.

"Occupiers can leverage and negotiate on the terms of the sub-lease, given that the head lessee has already committed and is effectively in a loss minimisation strategy," Church says.

"Rental rates between $350 and $380 per square metre per annum gross should be sufficient to secure the sub-lease space, depending on the amount of space required.

"This sub-lease opportunity showcases the kind of space that discerning occupiers should be able to take advantage of to upgrade their premises after the recent downturn in the market.

"Occupiers may also be looking to reposition their business for the next part of the cycle and take advantage of the low base cost and fixed rent profiles that can only normally be found as part of sub-lease offerings," says Church.

While the premises are in the CBD, there is plenty of reasonably-priced carparking within the immediate area.

The building, which is owned by St Laurence's property division, Irongate, also has naming rights up for grabs.

"Occupiers have the ability to secure market competitive rates and can promote their business in this highly visible location for 24 hours a day, seven days a week."

From an employee perspective, the building is near major public transport network hubs, including the Britomart train station and Auckland's ferry terminal.

"There are also numerous local bars, cafes and restaurants in the immediate Viaduct Harbour precinct, which give employees an array of options for entertainment and dining."

Church doesn't expect a sub-leasing opportunity like 139 Quay St to come to the market for quite some time.

"We expected a deluge of good-quality, sub-lease space to come to market after businesses were hit by the global financial crisis and prolonged recession.

"Previous recessions in New Zealand have seen sub-lease space lead the market downward, but the market was resilient and the sub-lease space didn't arrive in the numbers we originally projected.

Chris Dibble, head of research at Jones Lang LaSalle, says businesses have resized and restructured over late 2008 and through 2009 with a number of occupiers seeking to offload space.

"Auckland CBD vacancy rates increased from a low of around 6 per cent at the height of the market in mid-2007 to currently sit at 13 per cent with around 1 per cent or 10,000sq m of this being sub-lease space," says Dibble. "We are forecasting a vacancy rate of around 17 per cent to 20 per cent by 2013, depending on the amount of supply to come to market during the next three years, but sub-lease space will not be a major part of the overall supply.

"The increase in available office supply has softened the rental outlook but the rate of decline has started to slow.Upper prime net rents in the CBD have decreased by around 16 per cent since mid-2008, but the rents are now flat to slightly decreasing.

"If there had been a significant increase in sub-lease space, rents would have more than likely decreased further," says Dibble.

Prime net rents now average $418 per sq m in the CBD core, with a slight discount for the more established lower-grade premises, according to Jones Lang LaSalle research.

By Colin Taylor