A premier office building in central Tauranga that is home to a blue-chip tenant is being offered to the market for sale and will appeal to buyers seeking a high-quality asset.
Sitting at 108-128 Durham Street, the property is known as The Mercury Building and has approximately 9,895sq m of building area spread over four levels on a 2,862sq m freehold site.
Fully leased to NZX-listed Mercury NZ Limited under a 15-year lease that runs until February 2031, the property currently returns approximately $3,263,382 plus GST and outgoings in net annual rental income.
There is a 10-year right of renewal available from 2031 with one further renewal on offer, leading to a final expiry in 2046.
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There is a hard ratcheted market rent review scheduled for February 2028, offering the potential for future rental growth that will catch the attention of discerning investors.
The current rental income from the building is well below the rental rates being achieved by new developments in the city, suggesting there is scope to grow the rental stream.
To further safeguard the asset, the tenant contributes an additional 5 per cent of annual operating expenses into a sinking fund, helping to futureproof the property against capital expenditure requirements.
The property, which is surrounded by major civic, government, and private office developments, has 61 on-site car park spaces and 20 motorcycle parks in the basement.
With transport links and a broad array of amenities within walking distance, this premium offering benefits from its outstanding central location.
Colliers Directors Blair Peterken, Simon Clark, and Peter Herdson have been exclusively appointed to market the property for sale and are taking expressions of interest closing at 4pm on Thursday 19 June, unless sold prior.
Constructed in 2015 to a superior specification, the property remains in as new condition. It has three levels of office accommodation with floorplates ranging in size from 2,166sq m to 2,584sq m. The top floor also has a 206sq m balcony.
Pedestrian access is provided via a prominent street-facing entry on Durham Street, leading into a high-spec main lobby. Secured vehicular access to the basement car park is available via a rear service lane, accessible from both Grey and Elizabeth Streets.
Peterken, Director of Capital Markets at Colliers, says the strength of the tenant covenant and length of the lease term are key drawcards for this offering.
"Mercury is one of New Zealand's leading electricity and utility retailers. Following Mercury's acquisition of Trustpower's retail business in 2022, the Durham Street office remains an important operational site, supporting Mercury's expanded customer service and retail functions," Peterken says.
"They are firmly committed to this highly functional building that benefits from its strategic inner-city location."
The wider Durham Street precinct has undergone significant investment, including major streetscape upgrades and a new laneway that connects through to the Grey Street retail precinct. Across the road, the newly developed University of Waikato campus draws increased foot traffic to the area.
Tauranga is a city that continues to grow at a rapid rate and data from the most recent Census highlights an 11.5 per cent increase in population between 2018 to 2023.
Clark, Managing Director at Colliers Tauranga, says the local CBD is currently experiencing a wave of commercial and public infrastructure development.
"New council and corporate office buildings, as well as a library, community hub, museum, apartments, and a courthouse will all add to a reinvigorated downtown area that will be highly attractive for local residents when complete," Clark says.
"These developments position the subject property to directly benefit from the surge in CBD workers, visitors, and residents that will populate the area in the future."
Herdson, National Director of Capital Markets at Colliers, says this modern building has many of the key fundamentals investors are seeking.
"The combination of a nationally renowned tenant in a top-tier property that enjoys pride of place in a sought-after location makes this an offering that warrants serious consideration," Herdson says.
- Supplied by Colliers
