Two blue chip national tenants paying more than $127,000 yearly rent are housed in a substantial Whakatane CBD office building which has been placed on the market for sale
WSP Opus has been in the 685 square metre 13 Louvain Street property since 2015 and New Zealand Housing Corporation moved to the building in March this year.
Both tenants are on long leases, paying gross yearly rent of $127,244 plus GST in the two-storey architecturally-designed building that is being marketed by Tauranga Bayleys salespeople Larissa Reid and Rhys Mischefski for sale by auction on August 7.
“Although the property is 10 years old it is in immaculate condition – not a mark or scratch on the office walls,” Ms Reid said. “It has been extremely well maintained for a decade.”
The tenants occupy all of the rentable area in the building which covers nearly the entire 1,011 square metre site and has an assessed seismic rating of 80 percent of new building standards (NBS).
The building sits on freehold land - a rarity in Whakatane's CBD where most of the land is leasehold and owned by the Whakatane District Council. There are moves afoot by the council to consider freeholding some of its sites on a case-by-case basis.
Whakatane plumbing firm owner Maurice Shapley, who has several properties in the town, originally constructed the building for the Department of Corrections, but the justice offshoot moved elsewhere before Opus signed a lease.
Within the building, Opus has the biggest floor area of 441 square metres while New Zealand Housing has offices in 160 square metres. It was originally designed to be split in to three or more rentable tenancies if required. Clients visiting the property have the choice of five car parks at the front of the building just off the road and 10 at the rear.
WSP Opus, a civil engineering and infrastructure consulting company, started a three year lease in 2015 with three three-year rights of renewal. It pays yearly gross rent of $89,244 plus GST and there are rent reviews in 2021 and 2024.
New Zealand Housing's four year lease started in March this year and it also has three three-year rights of renewal, with the lease ending in 2034. The corporation pay yearly gross rent of $38,000 plus GST and has rent reviews in 2023, 2026 and 2029.
Ms Reid said the rent paid by the tenants is average for Whakatane. “There are higher rents in the CBD, but they are in bigger and new buildings.”
The property has a Whakatane District Council commercial 8a zoning and a rating valuation of $1.5 million.
“There have been two comparable sales in Whakatane recently.” Ms Reid said.
A two-year-old, 800 square metre building at 5 Louvain Street, with a rental income of $185,824 plus GST a year sold for $2.6 million in May, at a yield of 6.47 percent; and 100-106 Commerce Street, a 1013 square metre property refurbished in 2008 and returning a yearly rental income of $204,600, which sold for $2.6 million in November last year, at a yield of 7.87 percent.
Ms Reid says the 13 Louvain Street property is a high-quality hassle-free purchase and appeals to a range of buyers similar to the buildings recently sold.
“It gives a new owner the confidence of nationally-recognised tenants providing tenure security and longevity in a high growth location,” she said.
Louvain Street is located off Commerce Street, the main arterial into Whakatane CBD. The town is the largest urban area and the major service and administrative centre for the Eastern Bay of Plenty. It has population of 20,230 and is becoming increasingly popular for people moving from Tauranga to find cheaper land and housing.
Ms Reid said the outlook for Whakatane was positive and money was being invested in commercial activities and tenants, particularly retail, were looking for property.