A 9-level office building with potential for conversion to student accommodation or other adaptive reuse is for sale, with generous holding income sweetening the offering for add-value investors or developers.

The property at 1-11 Short Street was constructed in 1971 and occupies a prominent 1,342sqm slightly sloping site with frontages to Short Street, Anzac Avenue and Eden Crescent.

The building has been leased to the University of Auckland since 1995, complementing its main city campus and serving a variety of purposes during its tenure. It returns guaranteed annual income of $1,098,165 plus OPEX out to December 2026.

With a traditional office tower configuration, there is 4,950sqm of lettable area with a mix of partitioned and open-plan space plus the usual amenities, and secure, covered carparking for 46 cars. The property has undergone refurbishment over the years to suit the university’s requirements, has been upgraded to 67-percent new building standard, and has good access to public transport and major arterial routes.

Wide city and harbour views are available from the building’s upper levels and clever redevelopment of the site could further harness these.

The property is being marketed for sale by James Chan, Quinn Ngo and Karen Yung, Bayleys Auckland by way of International Tender closing Thursday 20th March, unless sold prior.

Chan says the Business-City Centre zoning would allow intensification of the site, and with Auckland receptive to innovative mixed-use urban spaces, and significant supply gaps for certain asset classes, he expects the property will appeal to add-value investors, landbankers and developers.

“Seldom do you find such a well-located building with such a long frontage and triple-street profile. Conversion to meet the shortfall in student accommodation, creation of a boutique hotel, or a residential build-to-rent (BTR) development offering affordable rental accommodation are all possibilities to optimise the site.” says Chan.

“Being so close to the University of Auckland and Auckland University of Technology’s city campuses, and given the waiting lists that exist for oversubscribed existing student halls of residence, student accommodation would seem a logical development proposition.

Ngo says accommodation availability is a crucial factor in students’ university choices, and private investment into the purpose-built student living sector would be required to allow supply to keep pace with demand, particularly as international student numbers rebuild post-pandemic.

“The development sector is now bouncing back, and listed entities are making proactive moves into the living sectors with an example being Precinct Properties undertaking a purpose-built student accommodation project at 256 Queen Street, diversifying away from office and retail centre projects to fill a market gap.”

Equally, a BTR scheme could improve the supply of long-term rental accommodation in the central city, and a hotel development could also be viable, with the Pullman Hotel in the immediate vicinity enjoying strong occupancy levels.

Yung says the short-term holding income through to the end of next year would give developers and add-value investors time to scope the site’s full potential and allow planning and consenting for a new project.

Bayleys’ global real estate partner Knight Frank highlights the broader living sector, which includes student accommodation, co-living spaces and other managed accommodation like BTR, as a key investment class for family office and private investors across Asia-Pacific.

“Relatively stable income streams and robust demand off the back of a challenging rental and home ownership market are driving investment activity in the living sectors,” says Yung.

“Investors are realising they can be part of a movement to leverage changing demographics and lifestyles and this is underpinning growth and seeing new stock presented to the market .”