Watercare Services' new green rated building finds owner

Exterior elevated view of the Watercare Services Building at 73 Remuera Rd.

Just two weeks out from its anchor tenant moving in, Mansons TCLM has sold the completed Watercare Services Building at 73 Remuera Rd in Newmarket for $100 million.

The 12,796sq m building on a 4340sq m freehold site has been acquired by a private investment company at a 7 per cent yield.

Paul Hain of Bayleys Real Estate, who brokered the sale and also negotiated the property's two biggest leases, says it has been purchased as a long-term investment hold.

"The buyer was attracted by the strong tenancy profile - with over two thirds of the space occupied by local and central government agencies on long-term leases. The leases will provide good capital growth because they have fixed annual rental escalations," says Hain.

"It's also a high quality, new Five Star green rated building with all the latest design elements that tenants are looking for and it's in a popular city fringe office and retail precinct. The building sets a new benchmark for office development in this location and there are very few high value properties of this calibre available for purchase in the market at present."

Watercare Services Limited is relocating about 550 staff prior to Christmas from two buildings that it occupies in Nuffield St, Newmarket and East Tamaki to 7000sq m of space in the five-level Remuera Rd building. Watercare will occupy the top three floors on a 12-year lease that also includes 185 basement car parks and naming rights.

The New Zealand Lotteries Commission will occupy 1938sq m on Level One of the building and Avanti Finance is taking 1200sq m of space on the ground floor, both also on long-term leases. A cafe will be located on the ground floor.

Hain says as part of the sale agreement, Mansons TCLM will provide the buyer with a rental underwrite on the remaining two part-floors currently under lease negotiation. The Watercare Services building sale is the latest and largest of four substantial office building sales that Mansons TCLM has concluded this year.

Early in the year, the 8303sq m GHD Building at 27 Napier St, Freemans Bay sold for $63 million in a transaction also negotiated by Paul Hain. That property's largest tenant is Lion New Zealand with the balance of space leased to GHD, a global engineering consultancy.

The 8000sq m Oracle House building at 162 Victoria St West in Auckland's central business district has also recently been sold through Bayleys' John Halstead. Culum Manson, director of Mansons TCLM, says a confidentiality clause in the sale and purchase agreement means he cannot disclose or discuss any details of that sale. However, the building has reportedly been sold to Sir Russell Coutts.

Across the road at 151 Victoria St West, Mansons TCLM has sold Courier Post House for $22.8 million to a private investor, with a nine-year lease to New Zealand Post. The balance of this site is being developed into a new 18,600sq m office building with floor areas of 3100sq m.

Manson says there has been a shift in large corporate tenancy preferences away from occupying multiple floors in high rise CBD towers to low-rise buildings with big floor areas. The largest floor in the Watercare Services building is close to 3000sq m.

"This trend has escalated since our development of the Telecom campus building in Victoria St which demonstrated just how interactive and user friendly these types of buildings are. They are more efficient, reduce operating expenses which tenants pay for and enable the incorporation of design elements such as large central atriums which provide more natural light and a great working environment."

Manson says funds released from the sale of the buildings are being reinvested in the company's development business and also in growing its recently established property finance subsidiary, New Zealand Mortgages & Securities. This also lends to other developers and property investors.