The predicted drop in the OCR rate is tipped to fuel already strong demand for blue chip properties in the commercial property market.
The predicted drop in the OCR rate is tipped to fuel already strong demand for blue chip properties in the commercial property market.
Hamish Templeton, commercial sales broker with Colliers International, says investors are continuing to actively seek alternatives to bank deposits, with international and national investors showing keen interest in the tightly held Wellington CBD.
“Interest is also being fed by record low office vacancy in the CBD. Wellington is experiencing our lowest vacancy rates in two decades thanks to the conversion of several buildings into accommodation and a shortage of office buildings with a seismic rating above 80% NBS. This is the minimum requirement for government departments, who occupy more than half of the CBD office supply. This has seen strong rental growth for landlords with increasingly modest incentives.
Richard Findlay, Colliers International managing director in Wellington, who is marketing the building in conjunction with Templeton, says leasing demand remains high for quality CBD space.
“In Wellington’s office market, supply is scarce. There’s about 17,000sqm of office space currently being built, but that is already all committed. That demand for space is giving investors’ confidence and there’s no better time to invest in the Wellington commercial office market. We expect rents to steadily grow as the shortage of supply creates competition among tenants.
“Against this backdrop, there’s been an increase in interest from buyers located in other areas of the country and overseas.”
A prime example of the type of properties large investors are seeking is the 16-storey Willeston Centre in the city centre which is for sale by deadline private treaty, closing April 7 2020 (unless sold prior). The building fronts onto Victoria and Willeston St and Customhouse Quay and is the largest commercial building for sale in the Wellington CBD this year. It comprises 14 levels of podium and tower office, eight ground floor retail shops together with more basement retail and 13 on site car parks
Built in circa 1982 for owner occupier Colonial Mutual Life, it was converted into unit title office floors in 2004 by The Wellington Company and sold to investors and owner occupiers. In 2018, Auckland based private equity business CapitalGroup bought all the 11 different titles in a complex deal and condensed them back into single ownership.
“With one owner, the building has flourished and attracted significant tenants on long term leases including Public Trust and the Ministry of Foreign Affairs and Trade. The foyer has been completely refurbished and the facilities management has improved significantly,” Templeton says.
The Willeston Centre occupies a substantial 1,684sqm site on one of the busiest corners in the Wellington core retail and office precinct. Other tenants include Digital Nomad, Nursing Council, Levi’s Jeans and Dilmah Tea’s flagship New Zealand store, which is opening on the ground floor.
"This building is in a highly desirable location right in the middle of Wellington's corporate and retail hub. The upper floors have stunning harbour views and it is also seismically sound, with an NBS rating of 85%.”
