Rewrite the script for central office building

A five-level commercial building known as Pharmacy House at the western end of Willis Street on Wellington CBD’s fringe has been placed on the market for sale, as its long-term owner exits the market.

Located at 124 Dixon Street, a short distance from Willis and Cuba Streets, and Courtenay Place, the property is owned by Pharmacy Guild of New Zealand, which is a membership organisation providing support and services to community pharmacy owners. The Guild occupies office space on the ground floor and level four, and manages the building. It now wishes to deploy capital out of this commercial asset.

The mid-1980s’ building sits on a 399sqm freehold site and has around 1,150sqm of lettable office space, plus six basement car parks and three tandem parks on a separate rear title. A seismic assessment carried out in late 2022 puts the building at 60 percent new building standard.

Levels 1 and 2 are open-plan and currently used as functional gym space with exposed ceilings, while the other two upper levels comprise more traditional office layouts with a mix of open-plan and partitioned areas. Kitchenettes and amenities are provided on each floor, with lift and stair access through a central core.

The property returns below-market annual net income of $87,281 plus GST from multiple tenants, including IT consultants Megabyte New Zealand, Personal trainers ONI, and flooring specialists Miliken.

Agents marketing the property say the well-presented property could realise potential net annual income of more than $190,000 if the tenancies were upgraded, and leases restructured to reflect current market rates.

The City Centre zoning also supports a range of future uses, including conversion or redevelopment.

Pharmacy House is being marketed by Mark Sherlock and Luke Kershaw, Bayleys Wellington Commercial, with tenders closing 10th December.

The city fringe investment property benefits from strong surrounding amenities and excellent accessibility, and investors will recognise the long-term upside to be realised, says Sherlock.

“While providing a reliable income stream, the property offers clear scope to enhance returns through lease restructuring, refurbishment, and/or targeted improvements.

“It’s accepted that the building is currently under-rented and there’s genuine inherent upside for an experienced landlord to unlock.

“The building’s flexible zoning makes this an attractive proposition for both add-value and longer-term investors alike, with the wider Te Aro precinct providing a mix of hospitality, residential, and commercial developments.”

Pharmacy House is situated next door to the modernist-style Dixon Street Flats building, which has heritage significance as the first major apartment block to be completed in Wellington after the Second World War. It was recently acquired by an entity associated with the proactive development firm, The Wellington Company.

The area is well connected by public transport, with frequent bus services and easy access to arterial routes linking to the CBD, airport, and motorway network.