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Quality office stock in short supply as investors compete for quality assets

A tenanted commercial asset is generating strong interest amongst investors, increasingly competing for a limited supply of quality properties across Christchurch’s central city and fringe hubs.

The modern office on 645sq m (more or less) of freehold land at 413 St Asaph Street is in a prime position near the corner of Fitzgerald Avenue in the CBD adjacent Phillipstown commercial precinct.

Bayleys Christchurch Capital Transactions Senior Broker Ryan Kerr says the property is marketed for sale amid an acute shortage of quality office supply, despite the CBD rebuild delivering large tracts of prime space.

“Occupiers have increasingly turned onto the benefits of relocation to Christchurch, with corporate head offices nationwide recognising the cost efficiencies on offer when compared with similar office footprints in Auckland and Wellington.

“Investors have been quick to identify this trend, increasingly seeking established commercial assets with good tenant structures as a hedge against inflationary pressures.

“Rental rates for new-build properties continue to climb as developers reassess feasibility in light of greater development costs.

“However, upward rental pressure at the top end of the market also has a flow-on effect for established assets. We see lease negotiations become more complicated and regular rent reviews commonplace as asset owners and tenants meet in the middle of a tight market.”

Kerr is marketing the premises for sale with colleague William Wallace with offers invited before 4:00 pm on Wednesday, 19th July 2023 (unless sold prior).

The standalone premises features a total floor area of 366sq m (more or less) with a seismic assessment of 85 percent (or greater) of New Building Standard.

There are 11 car parks and a backup generator included with the sale.

Built circa the 1990s, it comprises a mixture of refurbished, open-plan and partitioned offices plus amenities over two levels returning a net annual income of circa $95,040 plus GST and outgoings, with fixed annual rent reviews to two percent or CPI (whichever is higher).

National recruitment organisation ELE Limited occupies the premises with a six year lease which will commence upon settlement, plus two six year renewal rights.

Bayleys South Island General Manager of Commercial and Industrial William Wallace says the property is located in a central city adjacent area, which features a diverse mix of residential, commercial and industrial activity.

“Being less than three kilometres from the central city, Phillipstown is a sought-after commercial location that benefits from easy access to amenities, services and public transport routes.

“The property presents an excellent hands-free investment opportunity in the highly desirable Fitzgerald Avenue area, primed for growth and consistently reporting low vacancy rates, particularly for quality assets.

“With a tenant in place, and the premises recently upgraded, it suits the growing cohort of investors seeking easy-to-manage assets and diversification in their portfolios.

“Additionally, the property’s configuration, which would support two independent tenants, provides a split-risk opportunity should the new owner wish to explore this possibility in the future when the current lease ends.”

Click here for more information on the listing.

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