Supermarkets are among a string of interested suitors lining up for a large and prominent inner city site.

The Capital City Motors site on Taranaki St has been sold by Colonial Motor Company to Balgan, an offshoot of property developers Vicinity, for a confidential sum.

Vicinity director Mike Cole said they had been in negotiations to buy the 7500 square metre Te Aro site for more than two years.

The Precinct Property tower sold by Precinct Properties in Featherston St

“It’s a fantastic site. A corner site of that size, there’s just nothing else like it.”

Vicinity is now looking at how to redevelop the site. Cole said it had the potential for a wide range of uses and they were fielding interest from a lot of parties, particularly the retail sector.  Approaches had been made by both the leading supermarket groups.

“For people who want a bigger presence in town, there’s literally nothing else, there’s only Chaffers New World which has got a slightly bigger site. ”

Cole, an architect and the Wellington branch president of the Property Council, set up Vicinity with his friend, developer and investor Ash Pama, a few years ago.

Their firm is best known for the 35-unit Tattoo Apartments in nearby Wigan St and 22-unit Canvas Apartments in Wllis St. They also have agreement with a private family investor to build a 16-level apartment block at 111 Molesworth St. Cole said they were just putting the final touches on a revised resource consent application.

The Molesworth St apartments would be one to two bedroom, in the “mid to upper” price range and have interesting features such as stainless steel and exposed concrete. Cole described his style as kind of “funky”. “Being an architect I’m just trying to do cool stuff.”

Although he could not say how much was paid for the Taranaki St site, it was in the “tens  of millions”. It had a “good” height limit of up to 36.4m under new discretionary limits, and people had ideas for a wide range of floorplans and levels. Whatever went on the site, he hoped it would complement surrounding uses. “We’d really would like to see something to revigorate the area.”

He was not sure where the present business was going, but it had a couple of years before the lease ran out. “I’m sure they’ve got something in mind.”

Meanwhile, in another sign that the Wellington commercial property scene is coming back to life, Precinct Properties announced last week that it had sold the office space above the Intercontinental Hotel. Precinct Properties sold the Featherston St tower block for $76m to an undisclosed party.

The tower, which has 13 levels of office space above Wellington’s Intercontinental Hotel and boasts harbour views, was sold in line with its latest valuation. It is the fourth big office building to be sold in a month, and follows the sale of another Precinct building, 80 The Terrace, for $36.1m to Wellington investors Mt Everest Properties. Precinct said it would use the proceeds to plunge into its revamp of Wellington’s Bowen Campus behind the Beehive which it hopes to begin late next year.

The company has raised about $210m in asset sales lately to help fund new projects, including its Downtown tower block and Wynyard quarter in Auckland.

Chief executive Scott Pritchard said Precinct had owned 171 Featherston St since it listed in the late 1990s. The building actually had 23 levels but 10 were occupied by the hotel, which was bought by Indonesian-controlled Columna Capital Holdings in 2011.

Current tenants of the 13-level office tower such as Bell Gully, First NZ Capital and Dick Smith Electronics were likely to find it “business as usual” under the new owner.

Asked whether it was a good time to sell in the Capital, Pritchard said the Wellington market was “definitely improving”.

“If you think about last year, there wasn’t a lot of sales but we have definitely seen more interest in that market in the last six months.

“People are becoming more confident around the Wellington occupier market, I think interest rates are obviously remaining very low and yields for good quality Wellington real estate are still higher than Auckland in particular and still probably present good value. I think investors are realising that.”

However, Precinct had no immediate plans to sell any more buildings in the Capital.

“It’s a very good market and it’s one we’ll be in for a long time.”

Its Wellington portfolio includes the State Insurance Building, Vodafone on the Quay, 125 The Terrace, No 1 and No 3 The Terrace, Pastoral House, Mayfair House, Deloitte House and Bowen Campus.

In Precinct’s latest portfolio revaluation, Wellington buildings depreciated by 2.1 per cent due to a slight reduction in market rents. 

Original article

Raj Khushal