New owner plans major facelift for CBD building

A six-storey building in the heart of downtown Tauranga is set to be redeveloped. Photo / Andrew Warner

A property investor plans to pour millions of dollars into an empty six-storey building in Tauranga's central city, which, a business leader says, is another step towards revitalising the CBD.

Waitomo Properties managing director Steve McLennan said he bought the Tauranga office building for $1.1 million - nearly $3 million less than its rating valuation.

Mr McLennan headed off the rest of the tenderers by making an unconditional offer for the 39-year-old building, which he has called South British House - the building's original name.

He said he was planning on revamping the office spaces and creating some ground-floor retail space.

The contract was signed mid-December and he has lost no time to begin marketing the building to future tenants, with the aim to have suites available by late 2015.

It restores a sense of hope to the building which has struggled for years since losing its major tenants, accountancy firm KPMG and lawyers Sharp Tudhope, to new developments on the edge of the downtown.

The sale to the Hamilton-based company represented a massive loss to the former owners, a syndicate of 34 investors who paid nearly $9.7 million in 2006.

Mr McLennan said he was bullish about the future of the downtown. "Everything is cyclical ... when buildings are empty it flushes out wonderful opportunities."

His unconditional offer reflected the risk associated with a building that was below the minimum earthquake standard of 34 per cent of new buildings.

Mr McLennan will engage Beca to study the structure and check the accuracy of the previous owner's 22 per cent assessment of the building's earthquake strength. Personal experience had shown him that people were a bit too fearful and the accuracy of assessments could vary wildly between engineers.

He was impressed with what he had seen from his own inspection of the building, saying that although it did not present well to buyers it had good detailing and the services were in beautiful condition. He will look at replacing the windows with full-height glazing to significantly increase natural light and improve the building's appearance.

"We will spare no expense fitting it out."

Mr McLennan, who describes himself as a Tauranga boy living in Hamilton, is nearing the end of a 10-year multi-million strengthening and upgrade of his family's other big downtown investment, Harrington House.

He said South British House was in a wonderful location, with great harbour views from the top three floors. A bonus was that it was next door to the Spring St carparking building and in a downtown that offered a big variety of shops and cafes.

The move has been welcomed by Tauranga Chamber of Commerce chief executive Dave Burnett, who said it was another positive step towards creating a vibrant central city.

"It goes hand in hand with some other major developments going on in the downtown including Trustpower and the tertiary campus."