One of Christchurch’s leading CBD office assets is being offered for sale, with Kathmandu’s New Zealand headquarters opposite One NZ Te Kaha Stadium on the market.
The three-level building at 223-231 Tuam Street provides approximately 4,636sq m of modern office and showroom accommodation on a 1,683sq m site.
The property is fully occupied by Kathmandu Limited and generates net annual income of approximately $1.95 million, with fixed annual rent increases of 2.5 per cent.
Kathmandu occupies the property under a six-year lease renewal, providing a weighted average lease term of 5.75 years, with a further six-year right of renewal.
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Colliers Investment Sales Brokers Mark Macauley and Marius Ogg say the property represents a rare opportunity to acquire a substantial, high-quality office investment in Christchurch’s CBD.
Macauley says major CBD investment assets have been tightly held in recent years, with very few properties of this scale and quality being offered to the market.
“There simply hasn’t been many opportunities for investors to acquire substantial, high-quality office assets in the Christchurch CBD in recent years,” Macauley says.
“The most recent major transaction was 181 High Street, directly opposite the Kathmandu building, which sold in December last year for more than $55 million at an initial yield of 6 per cent. That was a notable transaction for the Christchurch market and demonstrated the depth of capital looking to invest in quality central city property.
“With the Kathmandu building now coming to market, investors have another opportunity to acquire a significant modern office asset in what remains a tightly held CBD investment market.”
Macauley says the building has strong fundamentals for investors, combining a well-established tenant, modern office accommodation, and a prominent central city location.
“Kathmandu was founded in Christchurch and has occupied the building as its New Zealand headquarters since its completion in 2016.
“The property provides top-quality, highly functional office accommodation, with excellent natural light from windows on all four sides and flexibility in the way the floorplates can be configured.
“Kathmandu forms part of dual NZX and ASX-listed KMD Brands, giving investors exposure to a well-established international business with strong connections to Christchurch.
“You have a recognised tenant, a modern post-earthquake building, fixed annual rental growth, and an outstanding central city location. It’s a compelling combination.”
The property holds a 4.5 Star NABERSNZ Energy Whole Building rating and benefits from 65 car parks and 50 bike parks secured within the adjoining Innovation car park building.
Ogg says the location has become increasingly significant as investment and development at the eastern end of the CBD continues to build momentum.
“One NZ Te Kaha Stadium has obviously been a major catalyst, but what is happening in this part of the city extends well beyond the stadium itself,” Ogg says.
“You have extensive residential development through the East Frame, substantial commercial investment, hospitality and retail activity, and continued mixed-use development across this part of the CBD.
“Together, those developments are creating an increasingly important commercial and entertainment precinct at the eastern end of the central city.”
Ogg says national investor interest in Christchurch commercial property has been building for some time, supported by the strength of the region’s economy and the quality of assets now available in the rebuilt CBD.
“We’ve been seeing strong inquiry from outside Christchurch on quality investment properties for quite a while.
“There is increasing recognition nationally of what Christchurch now offers investors: modern building stock, significant infrastructure investment, and attractive investment fundamentals compared with other major New Zealand centres.”
He says Christchurch is now benefiting from the scale of investment undertaken across the central city since the earthquakes.
“A lot of the building blocks have now come together – the central city rebuild, transport infrastructure, residential growth, hospitality and retail development, and major anchor projects such as One NZ Stadium.
“Christchurch has reached a point where those elements are working together, and investors around the country are increasingly recognising the strength of the city’s investment proposition.”
The Kathmandu building at 223-231 Tuam Street is being offered for sale by deadline private treaty, closing at 4pm on Thursday 22 October, unless sold prior.
- Supplied by Colliers
