A purpose-built office building on the northern edge of Rotorua's central business district, with a sound leasing history from professional firms and government agency tenants, is for sale as its private investor owners realign a comprehensive commercial property portfolio.

Located at 1144-1152 Pukaki Street, Rotorua, the Pukaki Centre was built in 1989 and has undergone extensive upgrades and renovations in subsequent years. It is assessed at 70 percent new building standard.

The five-floor building has a rentable area of 3,663sqm and occupies a freehold rectangular flat 1,711sqm site held in two adjoining titles. It returns annual net income of around $468,374 plus GST and operating expenses from eight tenants on varying lease terms which provides a spread of risk.

Dual lifts service the well-presented and functional floors, with the ground floor subdivided to support several smaller tenants and the full floors of levels 1-5 occupied individually by Rotorua crown solicitors Gordon & Pilditch, Lakes District Health Board, and Ministry of Education.

There are modern kitchen and toilet facilities on each floor, the building is fully airconditioned and heated, and it provides on-site parking for 41 vehicles, with 11 of these being undercover on level one of the building and the majority of the others located on the western side of the property in a secure yard.

Positioned close to the lakefront in the block between the main retail strip of Tutanekai Street, and Fenton Street, and close to the city’s main dining precinct Eat Streat, the subject property is zoned City Centre 1 (Mid-City). Permitted activities under this zoning include hospitality, commercial accommodation, and residential accommodation above ground floor commercial/retail.

The site has dual entry from Pukaki Street and a rear service lane.

The Pukaki Centre is being marketed by Mark Slade and Brei King of Bayleys Rotorua and Brendan Bradley of Bayleys Tauranga with an asking price of $6,245,000 plus GST, if any, which represents a 7.5-percent yield. There is also potential for some vendor financing for an approved purchaser.

As a proven performer in the Rotorua leasing market with historically better occupancy than other office buildings in the CBD, and with a shortage of quality office stock in the city, the Pukaki Centre has solid fundamentals, says King.

“The building is one of only a handful of office towers in Rotorua and with a sound seismic rating and generous floor plates, is always popular with occupiers.

“The vendor has readjusted expectations around pricing and is motivated and realistic. Based on current dynamics, the 7.5-percent yield is considered lucrative for the Rotorua market.”

With solid demand from occupiers for office space in the city, King says as the leases rollover, a new owner could look to subdivide the floor plates to accommodate tenants looking for more compact premises, consider creating turnkey full-fitted office suites, or potentially plan coworking/flexi spaces to mesh with new styles of working.

With good views to Lake Rotorua from the upper levels enjoyed by the office tenants, a prospective purchaser could also consider repositioning the property to an alternative use, says Slade.

“The favourable zoning could lend itself to commercial accommodation, with a precedent set in the street behind the Pukaki Centre.

“The region’s first international five-star hotel – the 130-room 5-star Pullman Hotel in Arawa Street – opened at the start of 2020 after the former Zen Centre office tower was converted to hotel use.”

Bradley says as New Zealand’s tourism numbers start to rebound, Rotorua will want to reclaim its share of visitor numbers.

“While much of the city’s motel stock remains committed to emergency housing for the time being, there will be pressure on existing accommodation.

“With due process, hotel conversion – or residential apartment conversion – could be an option to explore to optimise the long-term value of this well-located site.”

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