Redeveloped Vogel St building sells for $10.2m

The $10.2 million sale of a building in Dunedin's warehouse precinct has proved the value of heritage redevelopment goes beyond just its feel-good factor.

The 130-year-old building - which was not listed for sale - has been bought by a group of South Island investors, further confirming the rise in the area's desirability.

The investment manager behind the purchase of 123 Vogel St says that desirability means a better yield from a building that will continue to attract good tenants, without the cost of a new build.

Tascott & Co Real Estate Investment Management's Toby Scott said things were ''shifting a little bit'' around the world in terms of work spaces.

''Occupiers have changing attitudes to the sort of buildings they occupy.''

Old buildings that had been repurposed were ''very pleasant places to work''.

As well, they remained popular over time, and that meant a good return for investors from rent.

''If it's always full, that's a good starting point,'' Mr Scott said.

In Dunedin it was hard to build a new building and ''make the rents work from an economic perspective''.

''Repurposing these older buildings... makes perfect sense from an investment perspective, and makes good sense from an environmental perspective.''

Repurposing a building had less of an impact on the environment than building new, something investors did care about nowadays.

The building is on 2105sqm of land and has 42 on-site covered car parks.

It is fully leased to seven tenants, including its anchor tenant, law firm Gallaway Cook Allan.

Former owner Chris Barnes bought the building for almost $3.2 million, and embarked on a $4 million facelift in 2015.

In 2017, it was highly commended in the Dunedin Heritage Re-use Awards.

The Dunedin City Council website shows its capital value for rating as $5.3 million.

david.loughrey@odt.co.nz