20 years after buying the prized Stewart Dawson Corner in Wellington for MFL Mutual Fund Ltd, Argosy Property Ltd chief executive Peter Mence is in charge of its sale with very different buyers in mind.
The MFL & SIL mutual fund portfolios were sold to the ING Property Trust in 2004 in exchange for units in the trust (initially 42% but now in single figures). The trust was a forerunner of Argosy Property.
Stewart Dawson Corner sits at the end of Wellington’s retail “golden mile”, at 360 Lambton Quay, and at the start of the more downmarket Willis St. It’s still prized as a retail location – the Stewart Dawson jewellery shop and 4 other fashion retailers are there – but a low seismic rating may see the old buildings’ replacement by residential development, with retail remaining at street level.
“It’s been a really good asset,” Mr Mence said this week. “The only thing now is, we can build 24 levels on top. You wouldn’t build office, so an apartment tower is more likely.”
The site’s future will largely be dictated by the Government’s tightening of its office footprint through its Property Management Centre of Expertise, which has been reducing office space requirements at rental reviews, putting multiple Government tenants into buildings it leases and drawing the Wellington office footprint closer to Parliament.
“As a consequence, we wouldn’t want to go any further south [toward Te Aro]. Ideally, you want to be close to the railway station. At Argosy, we’re not into apartment development so we can’t really realise the value of Stewart Dawson Corner, so the best option is to move it on.”
The 3 Stewart Dawson buildings were erected in the 1900s, were strengthened in the late 1990s but have a seismic rating in the lowest band, just below 14% of new building standard, and will require further seismic strengthening. They contain ground-floor retail & 2 upper levels of office.
Argosy also owns the neighbouring 8-14 Willis St, 7 air-conditioned office levels above ground-floor retail, built in 1984. It was upgraded in 2006 and has a seismic rating of 78% of new building standard. It also has the Earthquake Commission as a tenant on 5 floors.
Stewart Dawson Corner has 1752m² of floorspace on a 1060m² site, returning a net $1.148 million/year, and the Willis St building has 5055m² of floorspace on a 1160m² site, returning a net $1.059 million/year.
The 2 properties are up for sale either together or separately, by deadline private treaty closing Thursday 10 December, through Savills (Kevin Richards & Doug Osborne) & Wellington agency Paul Hastings.
Attribution: Information memorandum, interviews.