A prominent office building on a high-profile corner site in the centre of Hamilton with a blue-chip tenant presents buyers with the opportunity to secure a premium low-maintenance property with passive rental income.
80 London Street, Hamilton is an eight-level 7227sq m office tower that sits on 4184sq m of land.
The property is being offered for sale alongside 9-11 Harwood Street, which are two nearby sealed car parks that have 48 total spaces and a combined land area of 1118sq m.
The property was originally constructed in the 1980s and underwent substantial refurbishments by the tenant, Fonterra, approximately five years ago.
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The combined total net annual rental income for this offering is $1,799,064 plus GST.
The site is in the northern fringe of Hamilton’s CBD and is surrounded by popular local cafes and dining options, a gym, Centre Place shopping centre, FMG Stadium Waikato and Seddon Park.
Colliers directors Alan Pracy and Jason Seymour have been exclusively appointed to market the property for sale by deadline private treaty closing at 4pm on Friday 10 December, unless sold prior.
Fonterra, a global dairy co-operative, is part way through a nine-year lease that began in September 2017. It has two further rights of renewal for three years each and the lease includes fixed annual rental increases of 2.5 per cent.
The neighbouring car parks are also leased to Fonterra under a separate but similar lease.
Both leases provide for an earlier termination by Fonterra in 2024 subject to a substantial penalty payment.
The current triple-net lease format requires Fonterra to take full responsibility for the upkeep of the building, its structure, and major plant through the life of the lease (including renewals), with the lessor responsible only for its own management and administration costs.
Pracy, director of sales and leasing at Colliers Hamilton, says this is one of the city’s most desirable office buildings and has an exceptional tenant covenant and an optimum lease format for investors looking for income certainty and growth.
“Fonterra’s recent improvements of the building included upgrading the majority of the office floors, lifts, access control, stairwell, lighting, and the air-conditioning chiller,” Pracy says.
“The building includes ground floor retail space currently used as offices, plus seven levels of office space above. The building includes a services core towards the southern side of the building with fire stairs on the eastern and western elevations.
"The large volume, glazed atrium on the ground floor is the main entry point into the building and includes three lifts providing access to all floors.
“The distinctive raked design of the building means that the floorplates change with the levels. Levels 1, 2 and 3 form the podium level with larger floorplates than the upper levels. Levels 4, 5, 6 and 7 range between 620sq m and 680sq m.”
Seymour, director of capital markets at Colliers, says there is future development potential from this offering.
“While the car park lots are currently leased to Fonterra, they are a prime development opportunity for the future as and when they are no longer required as car parks or the tenant vacates at the end of the lease,” Seymour says.
“The car park site carries a City Living categorisation under the Central City Zoning in the Hamilton District Plan. The City Living area will grow to become a vibrant, mixed-use residential centre, supporting small to medium scale office and commercial activities within the heart of Hamilton meaning this site could be developed for a wide range of uses.”
Economic activity in Hamilton city is showing strong resiliency following last year’s challenges caused by Covid-19. Infometrics estimates that GDP in Hamilton city has grown 7.3 per cent over the year to June 2021.
- Article supplied by Colliers
