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On the vexed issue of Queenstown’s council settling on a new civic administration building, an Arrowtowner believes it is ignoring a low-cost, low-risk option — buying a building.
In its current consultation exercise, closing Sunday, on where council offices should be located, it is also asking how they could be delivered.
It is presenting three options — the status quo, where it is spread across five CBD offices, four of which it leases — a new-build on council land or leasing a new or existing building.
Real estate salesperson Tim Stewart, from Ray White Queenstown, believes council has a fourth option — buying a building.
He declares an interest in the topic, since he is listing a large building — 53-57 Shotover St — which he thinks would be very suitable council premises.
He notes its floor space is 3623sqm compared with council’s requirement for about 3500sqm.
It has direct access to the 500-space Man St carpark and is on a bus route.
And with the views from the top-floor balcony, "every time the mayor’s interviewed on TV, you’re advertising Queenstown for free".
But whether it is this complex or another, Stewart believes the council would be better off buying an existing building compared with the time, cost and risk of building a new one, or leasing offices.
Mountain Scene reported last year the developer behind Waipuna Rise is offering to build purpose-built offices, which council could lease, on the Frankton-Ladies Mile highway opposite the Queenstown Central shopping precinct.
Stewart says the risk with leasing is escalating rents and weak bargaining power when it comes to lease renewals, because the council would find it almost impossible to leave.
"Buying an existing commercial building is highly likely to be much better value and lower risk than either leasing or building."
The council would own a CBD asset that would almost certainly appreciate in value, he adds.
Stewart says if council bought the Shotover St building for, say, $40 million — its CV is $36.4m — its building purchase debt would cost them $1.6m a year, given the interest rate for council debt is 4%.
Leasing, given commercial property owners usually seek a return of about 5%-6%, would cost them — at, say, 5.5% — about $2.2m per annum.
