Accommodation shortage sparks major hotel conversion
Accommodation shortage sparks major hotel conversion
Auckland, 11 November 2016
A 19-level office tower in Auckland CBD is to be converted into a 250-room, internationally branded hotel.
The strategically positioned property on the corner of Queen Street and Mayoral Drive - formerly the location of the popular Queen’s Head Tavern – has been purchased by The Russell Property Group and associated investors for the purpose of conversion.
The sale was negotiated by Dean Humphries, national director of Hotels for Colliers International, who says the timing is perfect for new hotel accommodation in Auckland.
“The city is running at capacity due to the tourism boom currently sweeping the country and is desperate for more inventory.
“The massive increase in international tourists over the last three years - a 26% increase or nearly 700,000 additional visitors per annum has led to a critical shortage of hotel rooms in Auckland and other key tourism destinations around New Zealand.”
Humphries says a recent report commissioned by New Zealand Trade and Enterprise identifies a requirement of up to 4,300 new hotel rooms in Auckland over the next decade.
Brett Russell, managing director of Russell Property Group, saw the building at 396 Queen Street as one of the best conversion opportunities available in the Auckland CBD.
“After viewing this property we believe the timing is now right to convert this building to an internationally branded hotel to address the growing shortage of quality hotel accommodation in the city.
“We are also now in advanced negotiations with one of the largest global hotel companies to manage this investment for us and our investment partners. The resource consent has been issued for the change of use to a hotel after a highly positive process with Auckland City Council. Works are planned to start in December 2016 with completion ready for the 2017 / 2018 summer season.”
The property incorporates the original historical façade of the famous Queen’s Head Tavern with its distinctive blue glazed tower that represents one of the key landmark buildings of Queen Street’s entertainment precinct.
The conversion of 396 Queen Street follows hot in the footsteps of the Russell Property Group’s management of the conversion of the former Quba Apartments, located near Vector Arena, to the 4 star plus Adina Apartment Hotel.
The Adina has been very well received in the market, says Russell, and is a popular destination for guests given its proximity to Vector Arena, Britomart & the waterfront.
“Adina is one of the newest additions to the Auckland market, opening a year ago and providing a combination of studio and one bedroom apartment units. Additional two bedroom executive apartments have also been recently added.”
Humphries says these two new additions to the Auckland hotel market - representing approximately 410 rooms by the end of next year - will help alleviate the supply issues for hotel rooms in Auckland City.
“With market occupancy now at 86% and average room rates growing at over 10 percent per annum, Auckland now ranks amongst the best performing ‘gateway cities’ in the world.”
Four-star and above hotels such as 396 Queen Street are the type of projects the Government has been targeting through the Hotel Investment Attraction Initiative says New Zealand Trade and Enterprise’s general manager of Investment, Quentin Quin.
“This new internationally-branded hotel will provide Auckland with much needed high-quality additional rooms to accommodate the growing demand from international visitors.”
Construction work is anticipated to commence in December 2016 and will be completed by Dominion Constructors Limited who are becoming experts in the field of hotel development having completed a growing number of hotel projects in recent years including Breakfree on Cashel in Christchurch, Adina Hotel Auckland, Quest Highbrook, Sudima Auckland Airport and Sofitel Wellington.
These projects range from conversion/refurbishment of existing buildings through to new builds.
The Russell Property Group is a diversified property group with a growing presence in the New Zealand hotel sector.
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About Colliers International
Colliers International Group Inc. is a global leader in commercial real estate services with more than 16,000 professionals operating from 554 offices in 66 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 10 consecutive years, more than any other real estate services firm.
Founded in Australia in 1976, Colliers International is the largest locally formed real estate services firm with professionals worldwide. Find out more at http://www.colliers.co.nz/