Otago Accident Compensation building looks a safe bet

This high-profile corner property in Alexandra, Central Otago, is leased to the Accident Compensation Commission.

A high-profile corner site fully leased to a government tenant, the Accident Compensation Corporation (ACC) has been put on the market in the Central Otago town of Alexandra.

"This freehold property in the centre of Alexandra was purpose-built for the government," says Mark Simpson, director at the Queenstown office of Colliers International, who is marketing 75 Tarbert St for sale by deadline private treaty closing on March 17 unless it sells earlier by negotiation.

ACC holds a three-year lease dating from October 2015, with the right to renew for two further terms of three years each - giving a possible final expiry date of September 2024. Gross contract rental amounts to $123,275, with three-yearly rent review clauses built in to the lease agreement.

The single-storey, 660 sq m building occupies a 1012 sq m site on the edge of Alexandra's CBD, on the main arterial route east.

"It offers investors an excellent location and very high quality tenant covenant. When it comes to the key investment considerations of location, building quality and tenant, this property offers everything investors are looking for in one accessible package," Simpson says.

"The demand for well-tenanted commercial property has strengthened over the past two years nationally and locally, so we expect this offering to attract strong levels of inquiry," he says.

"The appetite for commercial property has improved over the past two years, helped by low interest rates, a renewed willingness by banks to lend and general improvement in buyer sentiment towards the commercial sector and the Otago region.

"In this environment, properties like 75 Tarbert St, with its strong fundamentals and government tenant, are very hard to come by and are often snapped up by investors when they hit the open market."

Simpson expects the building to appeal to a variety of buyers including local commercial property owners, rural sector investors looking to diversify into off-farm assets and buyers from further afield including Dunedin and Christchurch.

"There are a number of investors in Christchurch still looking to place insurance money in prime income-generating assets throughout New Zealand, so we are expecting inquiries from these buyers as well as from the local Central Otago market."

The building has a seismic rating of 100 per cent New Building Standard (NBS) having been constructed for Crown occupation.

"It includes well-presented, open plan office space, a reception area, meeting rooms and amenities with generous car parking provided on site," Simpson says.