Investment double shot with strong returns

One of central Wellington’s most recognised and admired commercial buildings has come to the market for sale, underpinned by a trailblazing tenant business and an adjoining second building.

The two mixed-use buildings across five titles on 675sqm of City Centre-zoned land at 163-165 Tory Street and 1-3 Francis Place, Te Aro, are home to Havana Coffee Works HQ, the iconic Wellington Cuban-style coffee business that has been on site for 16 years.

Co-founded by Geoff Marsland, widely referred to as the coffee baron of New Zealand coffee, Havana was wholly acquired by Lion NZ in 2018. Marsland owns the three-level green Art Deco-styled building at the corner of Tory and Francis Place in Te Aro, along with the adjoining pink two-storey building.

For 36 years, Marsland has helped Wellington cement its place as the country’s coffee capital, starting as co-founder of the revered Midnight Espresso and Deluxe cafes, before launching Havana Coffee.

Having transitioned out of the Havana business and with Lion at the helm of the operation, Marsland is divesting the buildings that continue to make Havana what it is today. The flagship green corner building built circa-1950 is unit-titled and contains the roastery, café/coffee lounge, administration offices and a six-bedroom penthouse apartment and/or commercial light-filled space.

The adjacent freehold pink standalone 1980s building is currently interconnected to the main premises for efficiency and offers ground-floor workshop/dispatch area with an upper-level office space, which Marsland will take a leaseback for sentimental reasons. There are 15 off-street parks across both sites.

The current 10-year lease commenced January 2019, with a further two, five-year rights of renewal to be exercised. The combined properties return annual net income of around $250,000 plus GST, including billboard and advertising space used by Havana. The generous third-floor penthouse will have vacant possession on settlement, while the terms of the vendor leaseback of a 104sqm office space are to be confirmed.

The buildings were strengthened in 2023 and have an assessed seismic rating of plus 70 percent new building standard, while the City Centre zoning has a 42.5-metre height limit.

The properties are being offered for sale as one lot with tenders closing Wednesday 10th December, through Mark Walker and Sarah Lyford, Bayleys Wellington Commercial.

The engaging fitout, the loyal following that Havana has garnered over many years, and the potential the sites hold in the future support the value proposition, according to Walker.

“We’re excited to bring this property to the market as it’s always a real talking point when looking at central Wellington sites.

“It clearly fits the business ethos and vibe perfectly, with the eclectic fitout bringing a touch of gritty and animated Havana, Cuba to the capital.”

Walker says the lease to Lion NZ will give investors' confidence, with the mix of space providing a spread of risk across the buildings.

“Investors are back in the market, with expectations of another cut to the OCR ahead of Christmas fuelling activity. Term deposit rates have plummeted, undermining returns on cash in the bank so commercial property is looking very appealing to those seeking income and future capital gain.

“There’s also been a noticeable uptick in investor sentiment in Wellington off the back of the Government’s proposed new earthquake-prone buildings regime, which would see a more risk-proportionate system come into play.

“Expectations of building owners, occupiers, investors, lenders and insurers will change as a result of the proposed legislation, and we do expect to see a significant shake up in sales and leasing activity once the legislation comes into play.”

The location of the Havana-occupied property is highly sought after, positioned within one of the capital’s most vibrant commercial and lifestyle precincts, says Lyford.

“The high-profile property benefits from a steady flow of both foot and vehicle traffic, with Tory Street serving as a key route to and from the southern and eastern suburbs.

“It’s just metres from Massey University and Pukeahu National War Memorial Park and offers exceptional accessibility. Courtenay Place, the Basin Reserve, and the Wellington waterfront are within easy walking distance, providing convenience for staff, customers and visitors.

“Nearby, Stonewood Group’s Top of Tory precinct will soon welcome Mitre 10 and the innovative Social Project Gym wellness hub, proving the inherent value of the broader location.”