Garden city's trophy tower up for sale

The HSBC Tower building provides some of Christchurch's highest-quality office space and views from all levels. Photo / Supplied

Auckland developer Ken Wimsett's Latitude Group has put its trophy HSBC Tower on the banks of the Avon River in Christchurch on the market.

Opened in the middle of last year, the five-star green-rated 13-storey tower at 62 Worcester Boulevard is the first premium high-rise office block to be built in the South Island city in two decades. Latitude Group says it's selling to release money for other projects.

Located just off the corner of Worcester St and Cambridge Tce behind the historic Canterbury Club, the 40m tower is being marketed by CB Richard Ellis, which has leased 80 per cent of the office space to six international, national and top local tenants.

CBRE Christchurch managing director Mark Macauley says investors are not often given the chance to secure premium assets of this calibre.

"This is the first A-grade office tower to be built in Christchurch since 1989 and the first to be awarded a five-star green rating for design in the South Island. Opportunities for investors to buy new A-grade office towers within Christchurch and the South Island are limited, making this a rare opportunity."

Macauley says the tower will be sold by private treaty closing on August 4.

Providing some of the city's highest-quality office space, the state-of-the-art tower on a 1397sq m site has 91 car parks over three levels - almost double that of any other A-grade buildings in the city - 5892sq m of offices over 10 storeys, a double-height entry lobby and a swish 126sq m ground floor cafe/bar flowing to a landscaped outdoor dining area facing Worcester Boulevard.

The office levels have three high-speed lifts and a side core that allows for columnless floorplates of between 576sq m and 604sq m, giving planning flexibility, efficiency and maximum natural light. Level two has a large outdoor balcony and seating area over the top of the podium. Each floor from levels three to 11 has private balconies.

Macauley says the tower's floors have views from all levels, including the wider CBD, Southern Alps, Port Hills, Avon River and Hagley Park. "Tenants taking advantage of these views include HSBC, KPMG, JBWere, accountancy and business advisory company Polson Higgs and law firm Anthony Harper."

The property will return $2.7 million to $2.8 million once fully leased. Macauley says there is tenant interest in the two empty floors.

Rental rates for the tower are among the highest in Christchurch. "Initial scepticism that tenants would not pay up to $100 per sq m more than the city's top rental rates has been unfounded.

"To have a new tower nearly fully leased on high rentals so soon after its completion in a tough leasing market has been a boost for the city. The building also boasts one of the longest weighted average lease terms within the South Island market, giving excellent security of income for investors."

CBRE research shows Christchurch's CBD has 162,000sq m of office space and within the area 35,500sq m of A-grade space. Figures reveal vacancy levels in CBD office stock climbed from 8.7 per cent to 11.1 per cent last year. However, occupancy levels for A-grade space have remained relatively tight.

Senior research analyst Kevin Anthony says tenant demand remains positive and the opening of HSBC Tower has helped reduce the negative absorption of space across all grades of stock. In the A-grade office sector about 3500sq m of space has been taken up by businesses in the past year. Anthony expects vacancy levels in A-grade buildings to remain stable for the rest of this year.

Macauley says the HSBC's Tower's five-star green rating has had a positive impact on tenants. It is designed to save costs in energy, water and recycling. "It is the most technologically advanced office tower in the CBD and has numerous energy-efficient features to meet environmental performance and provide long-term value for both the owner and tenants."

Sustainable features include low-energy light fittings controlled by daylight sensors, fittings reducing water use, high-speed destination lifts reducing energy consumption, thermal insulation within the building's facade, rainwater collection for toilet flushing and water-efficient taps and showers.

The property sits in a preferred office leasing location surrounded by the cultural heart of Christchurch that holds the art gallery and arts centre. It is one minute's walk from the centre of the city as well as cafes and restaurants on Oxford Tce.

"This is an established location comprising a mix of neighbouring low- and high-rise office buildings and quality residential apartments," says Macauley.

Under the Christchurch City Council district plan the property is zoned central city. The zone contains a large proportion of the city's employment opportunities and investment.

Macauley says the purpose of the zone is to allow a diverse range of activities at a larger scale and intensity than elsewhere, while preserving and enhancing the underlying features of the environment in the central city.

"The tower's location is one of the most attractive areas of the CBD with its tree lined boulevard-style street and characterised by the rich historical nature of the buildings, including the newly redeveloped Christchurch City Chambers and the Canterbury Club."

Latitude Group bought land for the tower development from the 137-year-old Canterbury Club in 2004 for about $4 million. The club used the money from the sale to restore its heritage-listed two-storey building, reposition a caretaker's cottage and build new amenities between the two buildings.

"With the benefits of cutting-edge technology, low maintenance, long-term leases, premium tenants and one of the city's best business addresses, virtually all investment criteria are met or exceeded."

Latitude Group has other developments in Christchurch and on its website says it specialises in high-yielding commercial and retail property investments, as well as project management and development.

Wimsett says the company handles all aspects of the investment property process, from analysing and selecting a potential property, to building it and finally managing it over the long term.

Some of its projects include Workstation 55 business park in Christchurch, Waipara Wine Village & Day Spa north of Christchurch and Elizabeth Arden House, Napier Plaza and Valcluse Apartments.