The Willeston Centre in Wellington's CBD has been sold to Auckland-based private equity business CapitalGroup Limited following a complex deal negotiated by Colliers International on behalf of 11 separate owners.The sale of the landmark 16-level office tower, in a prime location at 22-28 Willeston Street, on the corner of Lambton Quay and Willis Street, was concluded by Colliers International Wellington Managing Director Richard Findlay and Investment Sales Broker Hamish Templeton.
The transaction has been completed following Colliers’ identification of the building as an add value opportunity in a prime location with the potential to capture high-profile tenants, which are currently competing for the extremely limited amount of vacant office space in Wellington CBD.
Colliers then presented the building to CapitalGroup as a potential opportunity to make a valuable investment in the Wellington market.
The building’s sale has resulted in the ownership of a unit titled property, held by multiple individuals and investment groups, being consolidated into the hands of a single corporate entity with a sound track record as a commercial property investor, says Findlay.
“This building will now be owned and managed by a single entity, with a very good reputation nationally," he says.
"This is a huge advantage when it comes to leasing. We know from years of working with local and national corporate occupiers that a single owner, rather than a body corporate, is vastly preferable from tenants’ points of view."
Aligning the interests of 11 separate owners and facilitating the sale to CapitalGroup presented a significant challenge, says Templeton.
“This is definitely one of the more complex and time-consuming sales our office has been involved in. Nobody thought it would be possible to co-ordinate all 11 owners to sell at the same time.
"However we knew that with CapitalGroup’s excellent track record in restructuring assets to meet tenant demand, this was a strong opportunity for them.”
Given the extremely short supply of office space in central Wellington, the change of ownership means the three vacant office levels in the building are now likely to be considered highly attractive among corporate occupiers, Findlay says.
“Following the November 2016 earthquake, there is virtually no vacancy in Wellington CBD offices," he says.
"The sale of the Willeston Centre now offers a rare option for businesses to secure well-presented office space on the Golden Mile. This property is in a prime location, has an A-grade seismic rating and has space available now that’s ready for businesses to move into.”
The building occupies a substantial 1,684sq m site bordered by Customhouse Quay, Willeston St and Victoria St. It is located on the intersection of Willis Street, Lambton Quay and Customhouse Quay, which is one of the busiest corners in the Wellington core retail and office precinct, says Templeton.
“This building is in a highly desirable location right in the middle of Wellington’s corporate and retail hub. The upper floors have stunning harbour views and the building is also seismically sound, having been upgraded to A-grade standard in 2017.”
It provides a total of 11,350sq m of office and retail space, split between lower-level podium floors on the Customhouse Quay corner and tower levels on the Victoria St corner. Among the 20-plus tenants are NZIER, H2R Consulting, Cisco, Hewlett Packard, The Nursing Council, Levi Strauss and Two Degrees Mobile.
The penthouse office floor on level 14 is currently vacant, along with levels two and three. Discussions underway with potential occupiers to fill the spaces, says Findlay.
“We’re in advanced discussions with tenants looking at the available space and we’re expecting it to be leased quickly now that the building has been taken over by CapitalGroup,” he says.
The purchase of the Willeston Centre is CapitalGroup’s first foray into the Wellington commercial office market, with most of its investment portfolio in Auckland. The group viewed the property as a compelling opportunity to meet the extremely high demand for quality office space in central Wellington, Templeton says.
“Very few investment opportunities of this scale are available in the Wellington CBD, where large assets are tightly held especially in the current environment where the scarcity of office space is placing upward pressure on rentals.
"We are pleased to have assisted CapitalGroup with this acquisition, which has effectively re-positioned the building into a highly desirable option for occupiers.”
CapitalGroup Director Greig Allison says the limited availability of comparable add-value opportunities in Auckland at an acceptable yield level was a further factor which prompted the group to pursue a Wellington acquisition.
“The Willeston Centre presented CapitalGroup with the type of opportunity that is rarely available in the main centres – to convert a quality asset in a prime location into a highly desirable offering for tenants, who are looking to relocate to seismically-sound buildings.
"This is a sweet spot in the Wellington market which only a small number of buyers have the opportunity to access.”