City fringe site offers several tempting options

The 181 Grafton Rd property, with two 1970s building, occupies a whole city block with access to four streets. Photo / Supplied

Situated in a prominent location in Grafton, a big land holding and two buildings owned by Southern Cross Medical Care Society, which encompass a whole "city fringe" block, are being marketed for sale by Colliers International.

The property at 181 Grafton Rd comprises two linked freehold office buildings and a large open area with four street frontages and is being offered for sale by Tim Lichtenstein and Tony Allsop via deadline private treaty with offers due to close on Thursday, August 26.

"Southern Cross is due to vacate this building and relocate to their new headquarters in Britomart in April 2011 as part of a consolidation of their Auckland premises," says Lichtenstein.

"Effectively therefore, the building is being offered for sale with vacant possession, with numerous attractive opportunities available to the purchaser."

The property comprises a total area of 4092sq m on six titles, of which 1089sq m on four of the titles, is used for carparking.

On the site are two linked two-storey buildings, operated as a single facility for Southern Cross. The first of the two structures, the northern building, was built in 1972 and the southern building was built in 1975 and has been owned from completion by the insurance business. The two were combined into the single office when Southern Cross acquired the northern building.

Allsop says the properties were upgraded in the mid 1990s and are in sound condition offering a net lettable area of about 4133sq m plus parking for 125 cars, 87 of which are under cover in the basement.

He says the buildings present a number of opportunities, due to the way the property is laid out, the number of titles on which the buildings sit and its flexible Mixed Use zoning.

"A new owner could go in a number of directions with this property," Allsop says. "Options include completely disentangling the existing structures into two separate buildings, or integrating them fully. Another possibility is to use almost one quarter of site in undeveloped land that is used for carparking and which offers potential to redevelop, re-lease, occupy or subdivide."

Lichtenstein suggests the site could continue as offices but could also be developed as a retail showroom or for student or hospital accommodation.

He believes the interest will be primarily New Zealand-based, and says it will most likely appeal to current active buyers for this type of asset who include: high net worth private individuals; family trusts and charitable companies; developers and add value specialists; and central and local body organisations.

"It's the type of property that could also appeal appeal to private equity funds, owner occupiers and selected overseas investors," Lichtenstein says.

"Organisations with large space and/or land requirements with an eye on positioning themselves for the market upturn will recognise this as a great opportunity.

"Potential tenants could include large office occupiers requiring space ranging from 2000 to 4000sq m like corporates, or non-corporate occupiers such as training companies or even churches."

Allsop says it's rare for sites of this size close to the central business district to become available - particularly one with four street boundaries.

"Traditionally regarded as a secondary office location, Grafton is progressively being redeveloped and is now a re-emerging precinct dominated by education, social services and health providers.

"Buildings at 269 and 369 Khyber Pass were recently sold on behalf of ING to Les Mills who was keen to establish a gym in this location because of its profile, floor plate size, ease of access and good carparking, all of which are common to 181 Grafton Rd," Allsop says.

Rob Bird, Colliers' national director of commercial leasing & occupier services, says the property will also appeal to tenants as it is.

"We are seeing an increasingly active market for pre-1990 properties as tenants seek to balance cost and fundamentals. Also, there are very few fringe properties in Auckland that have large floor plates and a quantum of space available so we expect there will be tenant interest in this property for these reasons."

Allsop cites the upgrading of Mt Eden Railway Station as a further incentive for prospective owners, occupiers and investors to consider the Grafton Rd property.

"Although the site is already well serviced by bus routes, it is set to benefit further from the new Mt Eden railway station which is expected to result in easier travel access for both employees and employers."