BNZ move creates three new tenancies

The new tenancies at 155 Queen St are expected to bring in $382,900 a year, plus GST. Photo / Supplied

Unit 1A at 155 Queen St, on the corner of Wyndham St in the heart of Auckland's busiest CBD retail area, is for sale with new tenants on board.

Bank of New Zealand has leased this key corner location for a number of years but its relocation to its new $200 million headquarters at 80 Queen St in October will include a move for its present Queen St retail banking premises to new ground-floor premises in the 21-storey tower.

The 826sq m net lettable space the bank used to occupy at 155 Queen St has now been divided into three lengthy new tenancies, which will bring in $382,900 plus GST a year.

The new leases begin on February 1 after fitouts have been completed.

Colliers International brokers Grant Magill and Charlie Oscroft are marketing the large property, sitting on a strata title in the 16-level building, for Thai Malay Holdings, which will retain an interest through its tenancy of the property's Noodle Bar.

"The vendor is selling to focus on its core restaurant business but will remain as a tenant as it believes in the strength of the property and the location," Magill said.

The Noodle Bar Company is leasing 280sq m of the available space and plans to spend $500,000 on fitting out a new restaurant, due to begin in November. Once the lease starts early next year, the rent will be $150,000 a year and subject to a 2 per cent increase every second year, with two six-year renewal periods.

Anchor tenant New Zealand Post/Kiwibank will open a PostShop and a Kiwibank branch in the location.

This will occupy 367.72sq m of space over a nine-year lease term on an annual rental of $154,800, with reviews from the fifth year, based on the rise in the consumer price index plus 1 per cent annually.

Souvenir shop Aye NZ will take a six-year lease over 142sq m with rental terms of $78,100 a year subject to a 2 per cent annual increase.

"There will now be three long-term tenants in a space where there used to be one, providing a core opportunity for investors looking to spread their risk," says Magill.

"These are new tenancies with a maximum length of 12 years. At a time when we are seeing a flight to quality property with multiple strong leases, the core tenant New Zealand Post is an A-grade tenant that will attract foot traffic and investment."

This was evidenced by Colliers' recent sale of a portfolio of seven New Zealand Post properties in May for $45 million, achieving a yield range of 5.38 per cent to 7.6 per cent at an average of 6.5 per cent.

"The sale revealed that there is considerable demand for properties with A-grade location, tenant spread and lease length," says Magill.

New Zealand Post knows this site well, having occupied it before BNZ moved in.

"The Auckland CBD has largely recovered its position as one of the premier high-street retail destinations in Auckland, albeit now with substantial competition from Newmarket," says Oscroft. "The recovery of the retail sector is evident in low vacancy levels and strong rental rates."

Originally known as the CML Building, 155 Queen St was more recently named Dynasty Pacific House.

It was built in the early 1970s and originally had two levels of retail joined by an escalator and 14 levels of office space above. In the mid-1990s it was substantially renovated, the escalator removed and levels two to four converted to car parking accessible from the rear of the tenancy via Durham Lane from Durham St West.

At the same time the building was strata titled into three office units a floor and three retail units on level 1 and the ground floor.

"We expect private investors and family trusts to be looking at the property with real interest," says Oscroft, "as it is a strong passive investment opportunity, combining location, A- grade tenants, spread of risk and long- term leases."