News & Opinion

5 Short Street, Newmarket, Auckland

10 April 2017

5 Short Street, Newmarket, Auckland

5 Short Street, Newmarket, Auckland was purchased in 2004 for $8.8m and has moved from strength to strength under PMG.

Occupying a good location in Newmarket, it has retail on the ground floor, seven floors of offices above, totalling 4,200sqm, and 35 car parks.

The Opportunity:

However, the building had become dated so PMG embarked on a plan to fully refurbish it, again, in conjunction with a leasing programme. In 2013 Auckland University purchased the Lion Brewery site adjacent, presenting a real opportunity for this area to change significantly in the near future.

“We were confident that if we were to provide the right quality of office space in such a location, we would attract great tenants,” says Scott.

“Our experience shows that new tenants will not commit to a building based on a planned refurbishment, which is a mistake many landlords make. But with the pending arrival of a university campus, we knew tenants would be prepared to secure their space in an area about to undergo significant improvement,” he said.

The Project:

PMG prepared and presented a feasibility proposal to the building owners which was accepted. After successfully negotiating an early surrender of two tenants, PMG started the refurbishment which included:

• The first stage was a refurbishment of the ground floor lobby to provide a modern, well-lit, attractive entrance incorporating a new lift area and modern signage. It was interesting to hear how much of a `lift` it gave the existing tenants.
• Full refurbishment for a key tenant resulting in a new nine-year lease being signed.
• Floor-by-floor refurbishment.
• Refurbishment and provision of separate bathroom facilities on each level, as well as shower facilities which were asked for by several tenants.

The Bottom line:

5 Short Street has moved from originally having six tenants, to now an excellent, diversified mix of 21 and will soon be 100% occupied.

Rents have risen from less than $200sqm to over $250sqm throughout the repositioning process.

PMG has ensured built-in rental growth through negotiating favourable rent review clauses in the leases.

The building was sold to PMG Direct Office Fund in 2016 for $14.2m, again representing an excellent return on investment for investors.