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Auckland Council rejects $75m offer for carpark building

UPDATE / June 9: James Brown and Simon Rowntree pressured Len Brown for a quick response to their unsolicited $75 million offer for the council's downtown carpark building.

Today they got one: no.

The council says an unsolicited $7.5 million deposit cheque has been returned to Brown and Rowntree, who own Tournament Parking.

The pair had given the council until close of busniness Friday to respond to their cash offer for the 6442sqm carparking site. 

A spokesman for the council told NBR ONLINE Len Brown did not meet with the two businessmen, who claimed the sale of the carpark could fast track the City Rail Link development. 

Council chief executive Stephen Town says the council has not made any decision about selling the carpark ahead of developing its Long-term Plan.

“If there is to be any divestment of parking assets, a proposal to do so would be included in the Long-term Plan for public consultation,” Mr Town said.

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$75m carpark offer labelled "cheeky"

June 7: A $75 million unsolicited offer on Auckland Council's downtown carpark building has been bagged as "cheeky".

The building, which sits on a 6442sqm site, has a rateable value of $65 million ($32 million for the land, $33 million for improvements), $10 million less than the cash bid made yesterday  by Tournament Parking owners James Brown and Simon Rowntree. The pair say the building is in need of an upgrade.

 "It is a cheeky offer as it's not that much more than the CV but the property will gain in value hugely due to the CRL [City Rail Link]," said TransportBlog co-founder Matt Lowrie after being approached for comment by NBR.

The lower Hobson St carpark has around 1900 spaces, and sit in a prime location a block back from the waterfront Viaduct.

The $2.68 billion, central government CRL is due to be constructed between 2015 and 2021 (property buying is about to get underway), and will include a station two blocks to the east.

The council has long term plans to redevelop the site away from parking, Mr Lowrie points says.

"This offer means that vision might not happen."

The counci's City Centre Master Plan describes the view from the carpark in Lower Hobson St as "one of Auckland's finest, but currently reserved for vehicles".

It calls for the block to be redeveloped with shops, cafes and restaurants at street level and some carparking. The council wants to remove the carpark building as a "barrier to the waterfront" and "create a new harbour window," according to commentary on the plan.

Brown and Rowntree,  who are being represented by Matthew Hooton's PR company Exceltium, say their proposed deal would fast-track the City Rail Link project, and help ensure nearby Queen’s Wharf and Queen Elizabeth Square remain publicly-owned. It has been mooted that the council sell the spaces to help fund its leg of the CRL.

The pair's $75 million offer includes a legally binding commitment not to increase casual parking rates above the rate of inflation for at least five years.

"The council has been holding down the market on pricing and Tournament holding parking' prices at inflation doesn't change that,"  Mr Lowrie says.

Auckland Council chief executive confirmed Stephen Town an unsolicited offer was received Friday morning, but said no comment would be made until next week — including on whether, if it decides to sell, the council will seek other offers.

Brown and Rowntree say their $75 million offer expires close of business Friday.

ckeall@nbr.co.nz

Comments and questions
31

Aucklanders will hum and ha for 26 days, then the money will go elsewhere. Typical Auckland.

Is there a caveat in the deal? It reads it is u/c, therefore ACC can still sell QEII square, and definitely should.

The sale of this carpark to Tournament is not in the best interests of Aucklanders, and the council should just say no. Tournament is quite possibly the worst car parking operator out there.

How could Tournament possibly be worse than Wilson?

Sadly of a bad two, Tournament is worst.

How about you ask ratepayers what they would like to do with THEIR money Mr Brown. Personally I would quite like money to be spent on our core necessities which have been totally forgotten lately. Forget your
bl...y CRL for a minute and remember what your job IS. It is not your money to spend so recklessly. If we want to be reckless with OUR money
we are all quite capable of doing it ourselves. OUR money is not for you and your whims. Get on with what you and your staff are over-paid staff are paid to do for a change. You'd test the patience of a saint.

Well said, but he won't hear you his head is too far up his a...

You are forgetting one important part of your complaint here, and that is the fact that a majority of Aucklander's voted Mr Brown into office to act on your....yes your behalf!!! so like it or lump it that is the deal, so at this point in time put your hand up and stand against him at the next election and you could win in a landslide??

The council should hold out for a better offer from Wilsons

Unfortunately Wisonns brought most of Tournament 12 mths ago
Tournament still own some properties but cashed up thats why they can make the offer in conjunction with maybe a construction coy????
Still a duopoly
Restrict the building above the car park because that is where the value is ???

And after the deal is done, they'll likely 'discover' that the 'needed upgrade' is in actual fact, 'un-economic' and promptly demolish the structure so as to on-sell the land for a tower block....with a nice multiple

Agree. They are just land banking with the added benefit of great cash flow from the carpark.

Once the CRL is build, this will be redeveloped into commercial offices.

If Council want to ditch assets they need to run a proper sales process. That site could easily be worth a lot more than $75m.

"Timeo Danaos et dona ferentes" - or for those who didn't study the classics, "I fear the Greeks, even when they bear gifts".

Well, to their credit, Tournament have not only revealed their hand by announcing the price with an unconditional offer, but have also thrown down the gauntlet to the other developers, with a ballsy "Come one, come all".
If it is "cheeky", then the council will soon know by all the offers rolling in (TCLM?). If no one enters the fray, someone give Stephen Town a big kumara to suck on.

However, do we really want cowboys in designer jeans owning this site?

Well the answer to that is that the designer jeans wearing cowboys you refer to Rupie mo fo have indeed done a stellar job in Victoria Quarter so why don't you just wallow on in your mediocrity and stubbies and thongs and lament for your willie and what could have been.

Council developed Victoria Quarter withj minimal rentals for 2 years on ratepayers money

Wilson are Tournament Parking these days...James & Simon sold the parking business last year to them but kept the freehold properties where parking is already on site. They recently did 2 excellent developments where existing buildings particularly character/semi heritage was adapted & re-used....Osborne Lane in Newmarket and City Works Depot in Victoria Quarter (ex Rhubarb Lane)....TCLM are also 'associated' (funding) with them. The boys ultimately are excellent selectors of great land holdings.....at this stage the site is far too valuable in long term for Council to sell off yet & if they do so it should be on open market....however price is not everything, ability to develop quality is important....compare Britomart or Wynyard Quarter or Precincts plans vs crap out in Albany or Asian developers. My end comment is too early to sell....if the boys have put an uncon deal down then this demonstrates how good the site is long term....we shouldn't sell cheap or early (ie BNZ!)

It is in Auckland Council's interest to make car parking as hard as possible - they mint money from the fines etc they extract from car drivers and owners.

So they will sell to Tournament as Tournament will immediately up the charges, and so on and so forth.

Who is the largest carpark operator in the city ? Auckland Council of course. Easy peasy - sell the site for a whopping $75 M to whoever is mad enough to make this sort of offer then local body and central govt tax the crap out of them and declare a new by-law that all people who currently drive their motor vehicles to the CBD for work or even shopping must now change their dirty habits and either catch the reliable electric trains, or diesel polluting buses or skateboard or scooter or windsurf or cycle on our cyclist friendly inner city roads esp in the 3 months of monsoon like rain we experience or whatever and then buy site back for nicks at the inevitable mortgagee sale. In fact to make it more prohibitive fiddle around with Resource Consents so all new apartment complexes have no carparks, insert capricious conditions into all existing private sector car park consents outlawing for example early bird discounts, tax the crap out of any employer mad enough to provide staff carparks, ban people from parking their cars in central suburbs and walking final 20 minutes to work , ban Tournament , Wilsons, Secure et al from ever raising the casual parking rates, make sedge ways lawful and hey presto there is your seed capital for the new electric central city train loop ( which raja Linga erectus His Worship Lennie bro said would cost what $5 B but seems to go up a few billion every time it is publicly mentioned ) - go figure !!

Is auckland council want to sell then it should be put up for international tender/auction. If James Brown and Simon Rowntree and so keen on the property then they can bid/tender like everyone else. Who knows, the property might get alot more than there $75m offer at auction/tender...

Any sale and purchase of this or any other property in the public domain should morally if not legally be bid for via a sound procurement process. Unsolicited offers should NOT be entertained by any public body. Ratepayers have a right to know, understand any proposals to sell THEIR ASSETS. If such open, transparent and contestible processes are not followed the Mayor will be acting no better than a Mayor in a South American third world country. That is a fact!

For the Auckland ratepayer, it comes down to this: How much faith do you have in the Council to optimise the value of the site; either by conceptualising- and-executing a vision as part of a broader integrated development, or selling it off for the best price? None of the two gives cause for much optimism.

With regard to the former, just look at what blights Hobson and Nelson Streets etc (you reading this, Robert Holden et al?); and with the latter, how much are you willing to bet on the negotiating nous of a 9-5 bureaucrat? (Hint: the sale of the Government Printing Office, and the buy-back of NZ Railways from Toll Australia).

No surprise if TCLM is behind Tournament's offer, as they are already doing a JV (apartment and retail) with the carpark building in the Victoria Quarter. You can only guess that Tournament are confident of their play by being so open about the price they're paying, believing that any other buyers -- with the wherewithal to gazump them -- are thin on the ground.

It's worth well over $75 million - not that I have it - but the business case for this is pretty easy. The Council should put the price of parking up there as it's woefully low and would benefit Auckland traffic if it went up by promoting more use of the large number of public transport options which are very close nearby (ferry, train, bus).

However, most of all, start planning for a commercial building worthy of the site.

Carparks sell for between $75k and $90k in the CBD. This offer values the individual parks at $39k.

With $39k per park being a reasonable result for such a large lot size, with the condition the car park is in, and likely based on the income projections that Tournament were purportedly committing too.

Personally I think it was a decent offer. Fair enough the car park is not for sale and if it were, it should be subject to a full sales process.

I'd be surprised if there was anyone half as experienced as Tournament offering similar money though, let alone more.

Auckland needs to spend this money on better train links. I was there at the weekend and the traffic just keeps on getting worse!

Why would the council sell strategically important waterfront land that has a cash-flow positive operation on it, in a quick fire sale?

If they are stupid enough to sell such a choice piece of land and easy business, then please, do it in a competitive tender.

How about the council better the existing transport services.
Why is it that the only options we have from Point Chev to city is a 50 minute bus ride or drive your own car? Surely being in central should mean getting to work sooner. Try a better train network that DO NOT USE NORMAL ROADS like buses and add to traffic and congestion! Seriously though Auckland really does need a better train network.

A classic evidential case of market manipulation and price fixing - NZ is riddled with it from property to commerce and the NZ Government turns a blind eye.

Seems like Sherriff Len has run the two cowboys out of Dodge.
Unusual thing: Is why did the mayor bother to call the hombres in for a sit-down, when the Council was so dismissive of the offer? Why not announce the wholesale rejection in the public domain, especially, as there was no way the offer was going anywhere. And that's how the Tournament offer came to light, anyhow.

Not such a smart move by the Tournament boys to be setting a deadline for Council (a gentler form of an ultimatum) as anyone who's been up to Graham Street to lodge a resource consent application, will attest. You don't say to the counter clerk that you're giving Council until next week to have them approve what ever it is you're wanting; especially, not around lunch time when he's preoccupied with the filling in his Glad wrapped sandwiches.

The $75m offer seemed reasonable, bearing in mind, it costs $200 a month to rent a carpark in Tournament's Hobson Street site. Capitalise that amount out, and the figure of 79K per carpark seems ridiculously high.