Colliers Portfolio | Issue 4 2023

Licensed REAA 2008

Colliers Portfolio Issue 4

48 Shortland Street, The Vero Centre, Auckland Central More on page 4

Accelerating success.

Aug

2023

Recent Deals SOLD

2 Colliers Portfolio

20 Sir James Wattie Drive, Hornby, Christchurch Sold by Sam Staite and Hamish Doig

SOLD

119 Apollo Drive, Rosedale, Auckland Sold by Richard Kirke, Peter Herdson, Blair Peterken, and Shoneet Chand

SOLD

69 Corbett Road, Bell Block Sold by Benet Carroll

SOLD

Unit 5, 53 Cavendish Drive, Manukau, Auckland Sold by Ronal Prasad, Ryan Gibb and Rijak Bakshi

SOLD

175B Glenda Drive, Queenstown Sold by Mark Simpson, James Valentine, Sharee Aitken

LEASED

19E Triton Drive, Rosedale Auckland Leased by Ryan de Zwart and Janet Marshall

SOLD

2/61-63 Clyde Road, Browns Bay, Auckland Sold by Janet Marshall and Mike Ryan

SOLD

6 Franklin Road, Bay View, Napier Sold by Danny Blair

LEASED

11/83 Apollo Drive, Rosedale, Auckland Leased by Ryan de Zwart and Janet Marshall

Contents

Did you know?

Colliers Portfolio Issue 4 04

06

Premium Listings

Key Listings

08

10

12

14

News | Hawke’s Bay’s largest office buildings sold

Featured Brokers | Office Leasing Experts

New Zealand Research Report | August 2023

Take Colliers Portfolio on the go with you, by scanning the QR code below.

Welcome to the fourth edition of Colliers Portfolio for 2023.

As we edge closer to spring, there were some notable transactions in recent weeks that were brokered

by Colliers, suggesting we may be heading for a busy second half of the year.

This activity has been driven by returning investor confidence as the Reserve Bank of New Zealand has signalled that interest rates are unlikely to rise further as they have halted any changes to the Official Cash Rate.

The continued settling of expectations among vendors and purchasers bodes well for market activity as these parties find more common ground.

Owner-occupiers remain a popular type of purchaser for banks because they can borrow against the financial strength of their business, and we have seen these buyers remain active in the market as they seek high-quality offerings.

Our latest edition of Portfolio features a wide array of properties, including a large-scale industrial building with established tenants in West Auckland that could eventually be developed and an outstanding passive investment opportunity in South Auckland that is home to a fast food favourite of New Zealanders.

Thank you for your continued interest in Colliers Portfolio, our national sales team looks forward to speaking with you about your property requirements.

David Burley Auckland Director | Investment Sales

Colliers Portfolio

3

Premium Offering on Shortland Street The Vero Centre

Colliers Portfolio is online.

4 Colliers Portfolio

'Work from Work' Reconnect your teams Vero Centre, 48 Shortland Street , Auckland CBD For Lease

4 Star NABERZNZ

from 500 to 6,000 sqm

Hotel style lobby

Onsite Gym & EV charging

Generous incentives

Five premium floors will be available next year in the iconic Vero Centre at 48 Shortland Street. Each floor of 1,200 sqm is column free to accommodate modern fit out styles and work practices.

Step inside the modern, amenity-rich lobby with the Pavilion café & Espresso 48 welcoming you with open arms. End-of-trip facilities ensure a smooth transition from home to work, plus a host of additional onsite features enhance your daily work environment.

The Vero Centre is renowned for its central Auckland position and great connectivity to all access.

Chris Palmer 021 558 355

Kendall Grey 021 373 726

colliers.co.nz/p-NZL67024676

News

The available floors cover Levels 18-22 and are approximately 1,200sq m each and will be available in 2024. There’s a range of leasing options for potential occupants, including taking half a floor, a single floor, or multiple floors. Levels 21 and 22 have an internal staircase and will be available for lease as a combined offering only.

The Vero Centre’s large floorplates have been carefully designed to provide high spatial efficiency and can accommodate a variety of fit-out styles and work practices, especially modern, open plan, and agile-activity approaches being sought by workers post Covid-19.

The building’s amenity-rich lobby includes the Pavilion cafe, while elsewhere, high-quality end-of-trip facilities, modern bike racks, electric vehicle charging stations, bookable client parking, and a private gymnasium make this one of the city’s most desirable locations.

Vero Centre is one of a small group of premium office buildings in central Auckland and these select properties have a 1.15 per cent vacancy rate, according to the latest research from Colliers.

There’s a host of hospitality and shopping options on the building’s doorstep, with Queen Street and Commercial Bay only moments away.

Colliers Brokers Chris Palmer and Kendall Grey are leasing the floorspace via negotiation.

Palmer, Associate Director of Office Leasing at Colliers, says the ongoing flight-to-quality trend among office occupants means businesses are seeking best-in-class spaces for their team members.

“The way people work and attend the office has changed since the Covid-19 pandemic took hold and there’s a greater emphasis on providing employees with a highquality office experience as they continually return to work following an extended period in their home environment,” Palmer says.

“Quality space in a building such as the Vero Centre will always hold appeal for firms who are looking to offer the best available facilities for their staff.”

Grey, Office Leasing Broker at Colliers, says this is one of the premier office locations in central Auckland that also has a Gold Be. Lab accessibility rating and a 4-star NABERSNZ rating.

“With the Britomart Transport Centre a short walk away and nearby car parking buildings there’s a range of transport options for tenants in the Vero Centre. The motorway network can be easily reached in a matter of minutes,” Grey says.

“Once tenants leave their office, they are awash with amenities and the vibrancy that downtown Auckland has to offer.”

Kane Goulden, Kiwi Property’s Head of Mixed-Use Leasing, says the Vero Centre is one of Auckland's most prestigious office buildings.

“Vero Centre has long been one of the country’s flagship office towers, proudly housing some of New Zealand’s leading law, finance, and investment firms. It offers an outstanding range of amenities and easy access to transport hubs like Britomart. Kiwi Property's continuous capital investment has enabled the building to maintain its best-in-class status and help create a thriving tenant community.”

Palmer says the combination of a high-quality premises and sought-after location makes this one of the most impressive leasing opportunities that will be presented to the Auckland market.

Colliers Portfolio

With demand for top-quality offices only strengthening, five floors of premium office in the Vero Centre in central Auckland are now available for lease, offering prospective tenants the opportunity to acquire prime space in a sought-after location.

5

Executive office space available in Auckland CBD

Ideal Wairau Trade Workshop 170 sqm 8A Parity Place, Wairau Valley, Auckland

For Sale by Deadline Private Treaty closing Tues 29th August 2023 at 4:00pm (unless sold prior)

6 Colliers Portfolio

Industrial workshop 170 sqm

Four designated carparks

Owner occupiers & investors should inspect

Mike Ryan 021 402 461

Business Light Industry zoned

Road front unit with great signage

Ryan de Zwart 021 575 001

colliers.co.nz/p-NZL67024830

Boundary Lines Indicative Only

Freehold Corner Investment + Huge Upside First time ever on the market!

92A Railside Avenue, Henderson, Auckland

For Sale by Deadline Private Treaty closing Tue 22 August 2023 at 4pm (unless sold prior)

Returning $264,140 pa net

Diversified income from 7 tenants

Matt Prentice 021 464 904

3,058 sqm Freehold title

Strong future rental upside

Shoneet Chand 021 400 765

colliers.co.nz/p-nzl67024683

Metropolitan Centre Zone

Josh Coburn 021 990 691

Corner position on main arterial

Superb Location, Under Rented & a Market Review!

Sole Agency 25 Rennie Drive, Māngere

1,683m² net lettable area

2,462m² freehold site

Brad Johnston 021 409 553

Returning $227,700 p.a.

Market review Nov 2024

Clear span warehouse

38m road frontage

James Dickey 021 026 81093

colliers.co.nz/p-NZL67024762

As Rare as Hen's Teeth Sole Agency Unit 12, 400 Great South Road, Ōtāhuhu

For Sale by Deadline Private Treaty closing Wednesday 16 August 2023 at 4:00pm (unless sold prior)

$160,135 net return p.a

Ryan Gibb 021 826 421

Rare Trophy Asset

NZX Listed Tenant

Mixed Use Zoning

Matthew Barnes 021 828 563

colliers.co.nz/p-NZL67024661

Tenant onsite for 20+ years

Well-kept property

Colliers Portfolio

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For Sale by Deadline Private Treaty closing Wed 30 August 2023 at 4pm (unless sold prior)

8 Colliers Portfolio

Premium Offering on Shortland Street - The Vero Centre This building offers 1,200 sqm column-free floors, carefully designed to meet the demands of the modern office.

Details on page 4

9 Colliers Portfolio Image indicative only

Research

New Zealand Research Report | August 2023 10

Survey results: Tides turn in Auckland, while pressure persists in Wellington

Colliers Portfolio

Results of two of our latest CBD office vacancy surveys show occupier demand in the capital city remains resolute, while Auckland is experiencing a shift in demand and supply dynamics that have likely ended a three year slide in survey results.

Leasing activity keeps going The latest June 2023 survey shows Wellington CBD’s overall vacancy rate is at 5.6%, all but unchanged from the December 2022 figure.Vacancy in the capital city remains at one of the lowest rates recorded since 2008 signifying little respite for tenants searching for space. The current vacancy is well-below the 10-year average rate of 8.6%.

Auckland’s vacancy rate declined to 12.5% in the June 2023 survey, the first decline in vacancy since early 2020, and arresting a run of six consecutive increases that has led to imbalance between demand and supply in favour of tenants.

working conditions. Prime grade premises offer greater floor efficiency, enabling occupiers to easily vary layouts, increase collaboration and breakout spaces, while reducing desk counts. Higher quality premises are also better placed to provide employees with a richer workplace experience and meet increasingly integral Environmental, Social, and Governance (ESG) requirements.

The bifurcation in vacancy rates between prime and secondary grade premises continues. In the first six months of 2023, prime grade vacancy in Auckland’s CBD is at 8.0%, in sharp contrast to the secondary (B-grade and lower) sector where vacancy is at 16.8%. In Wellington, conditions at the prime end of the market are even tighter, with prime-grade vacancy at just 1.7% versus a secondary rate of 6.8%.

While the preference for prime-grade premises is clear, location remains a significant factor for businesses. As a result, demand has been particularly strong within the Auckland CBD's northern precincts. Prime-grade vacancy rates within Britomart, Viaduct Harbour, Wynyard Quarter, and the Victoria Quarter precincts are all below 2%. Northern parts of the CBD Core precinct have also experienced elevated levels of demand bolstered by their proximity to high-quality retail and hospitality. By contrast, vacancy rates within the Western Corridor, Midtown, and Quay Park precincts remain at elevated levels.

A variation in vacancy across Wellington precincts is also evident with overall vacancy ranging from 8.5% in the CBD fringe to 3.3% in Thorndon. Variations in prime grade vacancy rates though are far more limited reflecting the shortage of stock. Prime grade vacancy was recorded in only the Core precinct, at 3.4%, and the CBD fringe at 1.8%.

How do we compare on a Trans-Tasman basis?

Prime grade premises in demand but location remains key Prime (premium and A-grade) quality premises are in demand, but location remains key in occupier decision making, along with sustainability credentials and seismic ratings. In both centres, businesses continue to prefer higher quality spaces as they adapt to post-COVID

Vacancy rates in New Zealand’s two largest office markets compare favourably with those of Australia’s major centres Figures from the Property Council of Australia show that prime grade vacancy across the six major CBD office markets increased over the second half of 2022 from 12.4% to 12.7%. The increase has been driven by an active development pipeline which has seen new supply outstripping demand.

11 Colliers Portfolio With the exception of Canberra, all six major Australian centres have prime grade vacancy rates that sit higher than Auckland and Wellington. New Zealand’s capital has the lowest vacancy rate across Australasia.

Of the six major Australian centres, Adelaide has the highest prime grade vacancy at 14.8% while Canberra is the country’s strongest performer at 7.0%. In the two largest markets, Sydney ended 2022 with a prime grade vacancy rate of 11.1% while in Melbourne, the figure was recorded at 12.4%.

Development has increased the quality but is set to slow Auckland and Wellington have seen high levels of construction activity in recent years as the development sector has responded to the demand for new high quality, environmentally sustainable buildings, which provide high seismic ratings.

The delivery of new high-grade space, and the removal of secondary quality accommodation from Auckland’s inventory has resulted in an increase in the overall quality of accommodation, while the total quantity of space has fallen to the lowest levels recorded since December 2008.

Auckland CBD’s prime grade inventory has reached a new record high of 700,560 sqm, increasing by 90,655 sqm over the five years from June 2018. Over the same period, the quantum of secondary grade stock has fallen by 121,875 sqm. As a result, prime grade space now accounts for just under 50% of the total inventory, up from 42% in mid-2018.

In Wellington, development projects have lifted prime grade supply by 60,000 sqm, with higher grade space now comprising 26% of total stock up from approximately 21% in June 2018.

When looking ahead, there is currently approximately 99,000 sqm of new development under construction in Auckland’s CBD and another 26,000 sqm under refurbishment. With a majority of these projects due to complete over the next 24 months, Auckland will experience a spike in supply.

However, it is likely that further removals of secondary stock will offset a proportion of this gain. While an increase in vacancy can be expected as projects complete, it is likely to be short lived, particularly as new project commencements are set to slow significantly, given a softening economic backdrop, an escalation in construction costs, and constraints in land supply.

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News

Hawke’s Bay’s largest office buildings sold 12 Colliers Portfolio

Two iconic office buildings in the heart of central Napier, Dalton and Vautier Houses, have recently been sold, heralding an era of extensive redevelopment and presenting exciting leasing opportunities within the city.

Boasting a 100 per cent NBS rating, the buildings will feature flexible floorspaces that cater to a range of needs, with prospective tenants being able to secure areas spanning from 150sq m to 2,500sq m.

The landmark properties, recognised as the largest office block in the Hawke’s Bay region, were acquired by Wallace Development Company, a move that promises to transform the cityscape and invigorate the commercial landscape.

Blair has been appointed to lease these cutting-edge spaces, assuring the leasing process will be seamless and efficient.

Located at 180-190 Dalton Street, the buildings are adjacent to the new civic centre, which will include a new library, Napier City Council Chambers, and community spaces, along with a new civic square.

The properties will undergo a remarkable transformation, featuring two distinctly different towers with captivating facade enhancements that will not only elevate the design but also create additional office space.

Positioned at the corner of Dalton and Vautier Streets, these buildings enjoy a prime location in the central Napier commercial area, providing unparalleled access to a myriad of amenities, including hospitality offerings and popular shopping destinations. With the city’s retail hub and Marine Parade just a two-minute walk away, the site holds exceptional appeal.

Danny Blair, Director at Colliers Hawke’s Bay, who facilitated the sale alongside colleague Blair Peterken from the Capital Markets team, emphasised the potential of the transaction in revitalising the city.

“Hawke’s Bay faces a significant shortage of premium office space, and these buildings will play a vital role in meeting the demands of tenants seeking quality workspace for their employees,” Blair says.

“These landmark Napier buildings are well known to many, offering exceptional exposure and visibility to future occupants. We are thrilled to be part of this exciting project.”

The addition of further on-site car parks will complement the existing basement parking, enhancing accessibility and convenience for occupants. The refurbishments are slated for completion during the first quarter of 2024, promising a timely delivery of these state-of-the-art office spaces.

Ryan Schnell, Development Manager at Wallace Development Company, shared insights into their ambitious vision for the buildings.

“We are committed to creating sustainable improvements to the buildings with the addition of solar, EV chargers, and end-of-trip facilities. The fit-outs will cater to the unique needs of incoming tenants, transforming these buildings into a landmark property that will redefine the city centre,” Schnell says.

“By enclosing balconies to create more floor space, the total net lettable office space will increase from 7,269sq m to 8,400sq m, providing ample room for businesses to thrive.”

Wallace Development Company has already secured a government department as an anchor tenant, leasing approximately 2,100sq m of space.

This project promises to be a game-changer for Napier, invigorating its commercial landscape and adding to the city’s vibrancy.

As Wallace Development Company and its partners usher in this transformative phase, businesses and employees alike can anticipate exciting opportunities and a reimagined work environment that will significantly improve the lettable office space in the city.

News

Coburn, Director of Capital Markets and Site Sales at Colliers, says the built-in rental growth will be highly appealing for prospective purchasers.

Unit A, 210 Queen Street, Auckland is a five-level retail premises that has approximately 3,700sq m of floor area, of which 78 per cent is occupied by anchor tenant Farmers.

“Farmers is one of the most well-known brands in the New Zealand retail landscape and they are firmly established in this location,” Coburn says.

The property, which is zoned Business – City Centre Zone under the Auckland Unitary Plan, is being offered to the market as a fully leased, stratum in freehold investment opportunity.

“Their current lease agreement runs until May 2028 and there are two further rights of renewal in place for seven years each. The annual CPI increases provide continual rental growth.”

Colliers Directors Blair Peterken, Josh Coburn, and Peter Herdson have been exclusively appointed to market the property for sale via deadline private treaty closing at 4pm on Wednesday 16 August, unless sold prior.

Aside from the basement level, Farmers occupies the ground floor, mezzanine, Level 1, and Level 2 as part of their broad retail offering that appeals to shoppers from all walks of life.

Peterken, Director of Capital Markets at Colliers, says the property enjoys a premier position in one of Auckland’s most sought-after locations.

Primary access is via Queen Street through automatic doors. There is also separate access to the mezzanine level from a retail arcade that connects with High Street and Durham Lane.

“The return to the office has driven people back into Auckland CBD and this landmark building has long been a fixture of the cityscape,” Peterken says.

“Amenities of every type are within minutes of the Farmers building. Shoppers have a wide array of transport options with Britomart Transport Centre a short walk away and the future looks incredibly promising with the City Rail Link set to offer further connectivity.”

Farmers occupies 2,908sq m of floorspace, while Factor X Limited trading as Gorman, leases the basement and a foreign exchange kiosk completes the tenancy schedule.

The weighted average lease term of the tenants is just under five years.

The total net annual rental income from the property is $2,680,892 plus GST per annum. There is future rental growth on offer through annual CPI increases for Farmers and market reviews on renewal for Farmers and Gorman.

Dual escalators connect the ground, mezzanine, and first-level retail areas. Access to the second-floor storage and office area is via a lift. A loading bay and goods lift is located at the rear of the Farmers tenancy off High Street.

Sitting in one of the busiest spots on Queen Street, this strategically located property continues to benefit from increased foot traffic in the CBD through the influx of cruise ships and more people returning to the office following the easing of Covid-19 restrictions.

Pedestrian count data from Heart of the City notes that in Q1 of 2023, foot traffic was up 2 per cent on the previous quarter and remains on the road to recovery after the pandemic.

With the City Rail Link set to open in 2025, this prime property, that has frontage to Queen and Victoria Streets, will be perfectly positioned with Te Waihorotiu Station less than 500m away.

Colliers Portfolio

The Farmers building, a prominent fixture of Queen Street in the heart of central Auckland, is being presented to the market for sale.

13

Landmark Auckland CBD asset available for purchase

Feature

Office Leasing Experts | Broker Feature 14 Colliers Portfolio

Chris Palmer

Chris has been with Colliers since 2006, helping Auckland based companies find the right office space and negotiate successful leases.

Leasing | Associate Director Auckland Mobile: 021 558 355 Email:chris.palmer@colliers.com

Having trusted relationships with Auckland's landlords and in-depth knowledge of the office leasing market, he has helped lease 126,000 sqm of commercial office space.

By taking a genuine interest combined with an indepth knowledge of the Auckland market and the office leasing process, Chris successfully connects businesses to buildings across Auckland.

Kendall Grey Kendall focuses on office leasing within Auckland CBD and the wider central Auckland area, specialising in medium sized occupiers.

Leasing | Broker Auckland Mobile: 021 373 726 Email:kendall.grey@colliers.com

Since joining Colliers in 2010 he has assisted local, national and multi-national occupiers with their office requirements including Meridian Energy, Southern Cross, Nokia, Vodafone, Wilson Parking and Greymouth Petroleum.

Kendall’s success comes from his modern and efficient approach to his work, as he continues to develop innovative ideas within the commercial leasing market.

Expert solutions to accelerate our clients’ success.

Experts choose experts.

At Colliers, we maximise the potential of property to accelerate the success of our clients and our people. We are committed to attracting and developing industry leaders, empowering them to think and act differently to drive exceptional results. What’s more, our global reach maximises the potential of property wherever our clients do business.

Learn more about our experts and how they can help you get the most out of your next property decision.

Colliers.co.nz

Licensed REAA 2008 HSBC Tower, Level 23 188 Quay Street Auckland 1010 portfolio.colliers.co.nz

This document has been prepared by Colliers New Zealand for advertising and general information only. Colliers New Zealand does not guarantee, warrant or represent that the information contained in this document is correct.

Aug 2023

Accelerating success.