The upcoming sale of a central Wellington tower housing a large student accommodation complex is tipped to grab the attention of national and international investors.
Cumberland House on Willis Street is home to a 227-room multistorey hall of residence run by Te Herenga Waka – Victoria University of Wellington. The university has been the anchor tenant for over a decade with 13 years remaining on the current lease.
With views over the city and just a short walk from the university’s city campuses, the hall is particularly popular with first-year students and design and architecture students at the nearby Te Aro campus.
The fully leased mixed-use property comprises a 12-storey tower on Willis Street and adjoining four-level parking building fronting Victoria Street. In addition to the student hostel, it encompasses a ground-floor tenancy recently leased for a new indoor boulder climbing facility, along with a basement workshop/warehouse area occupied by Avis Rent A Car and more than 60 car parks on monthly leases.
The property returns a total net rent of $2,193,284 plus outgoings and GST per annum, around two-thirds of which is derived from the student hostel complex.
Bayleys salesperson Fraser Press said investments of this scale and quality were sought-after worldwide, meaning the site was sure to pique the interest of buyers nationally and beyond.
“The presence of three separate tenants plus car park revenue provides an attractive split-risk profile and diversified income.
“Having had Victoria University of Wellington in occupation for over 10 years and committed to another 13 years is testament to demand for this form of accommodation, which is increasingly viewed globally as a commercial property investment class in its own right. The prospect of ongoing recovery in international student numbers is likely to add further to demand.
“A new seven-year lease to Avis further enhances the tenant profile, while the recent leasing of a substantial ground-floor office/showroom tenancy on Willis Street to indoor rock-climbing operator Hangdog for a six-year term is an innovative addition to the tenant mix.
“The three lease agreements also provide for substantial further rights of renewal,” said Press.
The freehold land and buildings at 237 Willis Street and 184 Victoria Street, Te Aro, Wellington, are being marketed for sale exclusively through Press and colleagues Grant Young and Mark Walker of Bayleys Wellington.
Sale is by way of a tender closing on Wednesday 25 October.
Young said the Willis Street tower of approximately 7,187 square metres and the approximately 2,146-square-metre, four-level parking building on Victoria Street sat on a site spanning over 2,600 square metres.
Originally designed in 1969, the property has evolved over the years into multifaceted premises. The hostel facility underwent partial refurbishments in the mid to late 2000s and more comprehensive renovations in 2012/13.
“The main tower spans 12 levels and boasts a diverse range of accommodation options, including self-catering studios and studios that share communal bathroom and kitchen facilities. The ground floor encompasses a welcoming lobby, communal dining area and commercial kitchen. Mezzanine offices and a first-floor laundry and common area provide additional functionality and comfort to occupants,” Young said.
The Willis Street tower and Victoria Street parking building have seismic ratings of 70 percent (2023 report) and 67 percent (2021 report) of new building standard respectively.
“With dual frontages of around 40 metres each to Willis and Victoria streets, the underlying site is a substantial and prominent strategic landholding in the heart of Te Aro.
“Development-friendly Central Area zoning means there is potential to add further floors above the existing car park structure – with an allowable building height of 27 metres, which could increase further under the new district plan,” said Young.
A new owner could also add value by reviewing the current car park rental rates, he said.
Walker said the property benefited from its position in a diverse part of the inner city which was an increasingly popular place to live.
“Positioned just south of Wellington’s CBD, this location offers a balance between the bustling city centre and the colourful vibe of the Cuba Street precinct.
“Handy pedestrian access to a vibrant array of retail outlets, eateries and office spaces in and around Willis Street, makes this a sought-after location to live and work.
“Many neighbouring buildings combine upper-level offices with ground-floor retail. However, the neighbourhood is also sprouting a growing number of residential developments, including multi-level apartment complexes, which are enhancing the area’s diversity.
“A Massey University student accommodation building is located directly across Willis Street from Cumberland House and a new terraced-housing development is nearing completion to the south. Crucially for students living here, Victoria University of Wellington is easily accessible with a short walk,” said Walker.