An old earthquake-prone Thorndon office block is about to be converted into Wellington's newest hotel.
Auckland-based development and building company Safari Group yesterday settled the purchase of 61 Thorndon Quay.
Work is set to start in about in a month on a $10 million development to turn it into a Quest hotel with 36 apartments. The project is expected to be completed in six months.
Safari Group director Robert Neil said the building, which was bought for $1.3m, was ideal.
It was a brilliant location close to the CBD, just a short walk from Wellington Railway Station, Westpac Stadium and Parliament.
It was also close to several embassies and backed on to Pipitea House, the big new head office of the Government Communications Security Bureau which also houses the Department of the Prime Minister and Cabinet.
"It's a $10m development of a 36-unit Quest Hotel apartment development with a mixture of studio, one and two-bedroom apartments on levels one to four."
ECC Lighting, which has had its shop in the building for 19 years, would lease about twice as much space - the ground floor and the basement - to accommodate a larger lighting and furniture shop.
The building had been unit titled and many of the apartments, ranging in size from 27 to 80 square metres, had already been sold to investors.
They were priced from $163,000 to $312,000 with leases in place with Quest paying gross rents of $12,500 to $25,000 per year.
The leases were for 15 years with three further further five- year rights of renewal.
Neil said it was very similar to another project in Hamilton where the firm also converted a 1920s building into Quest accommodation.
"What we've found in the market that we're selling in is that they love that 1920s look.
"Thorndon Quay has a slightly different look to Hamilton but it has the same historic connotations and that's been proven already as we've already sold 75 per cent of the building after just one trip offshore."
Neil, who secured the property when it was put up for tender earlier this year, said the building required surprisingly little work to bring it up to code.
It was originally assessed at about 13 per cent of new building standard but engineers Harrison Grierson had revised that to about 50 per cent.
The seismic rating would be lifted to about 70 per cent with "minor foundation work and carbon fibre wraps on the columns".
About $80,000 was spent investigating ground conditions which established new piles would not have to be sunk under the building, despite the fact it is on reclaimed foreshore.
Most of the expense would be going on a complete internal fitout of the apartments, new services including lifts and air conditioning, and a 14-vehicle car stacker at the back.
"It will be like a brand new building with the historical exterior unchanged. We were very happy with the location, the opportunity and the price."
It was a classic case of a property where tenants had been lost and where the owner did not have the means to do the work required to go forward with it.
He was also pleased at how the project had come together.
In the three months since Safari went unconditional on the deal it had secured all the consents required and sold many of the apartments.
Neil said he was looking for other buildings in Wellington, Nelson and other locations that could also be converted to boutique hotels for Quest.
The building was built for the Dairy Association in the 1920s and it originally featured a showroom where cows were brought in to help demonstrate the latest in milking-machine technology.
Later it was used by the Defence Force to house its computer system.
Other tenants have included engineers Beca Carter and, most recently, the Capital & Coast District Health Board.
The last owner was Alison Bowie. Her late husband, Richard, bought it in 1994.
He converted the ground floor into the ECC Lighting showroom and built penthouse apartments on top to take advantage of the harbour and town belt views.
Bowie said she decided to sell as it was time to move on and she did not want to take responsibility for another upgrade.
The building, which has 2380sqm on five storeys plus basement, stands on a 692sqm freehold site. Its 2012 rating value was $1.45m.
The new Thorndon Quest will add to the 240 apartments the chain already operates in six central Wellington buildings.
The chain is also waiting for work to start on a planned new 40-apartment development in Jackson St, Petone.
- © Fairfax NZ News
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