LEASE OF CITY PROPERTY

Dominion, Volume 29, Issue 301, 16 September 1936, Page 15

LEASE OF CITY PROPERTY

Fixing Ground Rental COURT ASKED TO DECIDE BASIS Proceedings to determine the ground rental of a piece of laud'at the corner of Waring Taylor Street and Lambton Quay were commenced in the Supreme Court at Wellington yesterday. The lessor is the city corporation and the leases the Post and Telegraph Employees’ Association. ” Mr. Justice Smith presided. The city solicitor, Mr. J. O’Shea, with him Mr. J. R. Marshall, appeared for the corporation, and Mr. C. A. L. Treadwell, "With him Mr. H. J. V. James, for The Chief Justice (Sir Michael Myers) had expressed the opinion that the court had power to deal with the matter, so the question of jurisdiction did not arise, said Mr. O’Shea, in opening the case. The* Lease was dated November 18, 1914, and extended from September 1, 1914, to August 31, 1935, with the right of renewal for 21 years. It provided for the rental to be fixed as ground rental only. There bad been certain .disputes between th 4 parties, but it was unnecessary to go into the details, as the relationship between those concerned was perfectly satisfactory. All they asked was the assistance of the court in determining the basis on which the ground rental should be fixed. Mr. O’Shea submitted that there were three methods to be employed in fixing the rental: (1) To take other ground rentals that had been paid in the neighbourhood; (2) to take the tental and sales of other leasehold land and to take the sales of freehold laud in (he neighbourhood and apply some percentage to fix the rental; (3) to compare a proposed building with existing buildings in the neighbourhood and their rents. £387 a Foot. The new Government building at the corner of Stout and Ballance Streets would improve the locality from a business point of view, said Mr. O’Shea. In addition, its value would be enhanced by development arising from the new railway station,’ The site in question would be one of the most valuable in Wellington. It had a frontage to Lambton Quay of 40 feet and an average depth of 69 feet 1 inch. Evidence would be given that the value of the land in the ordinary way was £387 a foot and that anything up to £4OO a foot could be obtained for the land as freehold, on the open market. £'. N. Martin, city valuer, said that the site was right opposite the pedestrian access from one of the main resident’.al areas of the city and within 100 yards of the new Government building, which would accommodate at least 2400 people. The lease expired on August 31, 193. >, and the value of the land then was £15,478. That value was arrived at by taking a unit of value on Lambton Quay in that division for an inside lot, of £301) a foot, and a unit of value in Waring Taylor Street of £l3O a loot. He based the rental at £582, which was equal to a rental of £l4/11/- a foot on the Lambcon Quay frontage. A freehold block, 55ft. 3m, by 96H., on the corner of Featherston and Johnston Streets was sold in March, 1935, for £24,500,-which was equal to £443.43 a foot, said Mr. Martin. Since the rental of the Post and Telegraph block had been assessed by him at £582 a year, a section on the corner of Latnbtou Quay and Tokio Lane had been bought in November last for £9250, or £345.8 a foot. Featherston Chambers, a four-storied building on the corner of Brandon Street and Featherston Street, was erected in 1933 at an over-all cost of £16,000. The Government valuation of Invicta House, at the corner of Featherston aud Johnston Streets, together w’ith the laud, was £33,000. The total rentals were £3680 a year, the ground rent was £473 a year, and the fates £3ll/10/-, leaving a return of £2893 a year, wmch was equal to 10.9 per cent, on buildings .costing £26,472. _ , Midland Hotel Block.

Cross-examined by Mr. Treadwell, witness admitted that in March, 1929, the Government valuation of the Midland Hotel block was £38,000, and that he had assessed the net value at £47,048. Oa that figure he sought a rental of 5 per cent., plus £5OO for the hotel licence, but the arbitrators awarded a rental of 41 per cent, on £40,000, which was £l<oo a year. Mr. Treadwell: Do you agree that there is any difference in the value as a shopping area of, say, Waring Taylor Street and Grey Street? —“Yes.” Which is the better?—“l should say Grey Street.” Have you any possible doubt about it: —“No, 1 haven’t” Would it be accurate to say that the heart of the Lambton Quay shopping area is from Grey Street down to Johnston Street? —“1 should say down to Woodward Street” , I think you will concede that the better side is the western side?—‘lt used to be about 25 years ago.” Never mind about the position 25 years ago; I am asking you about to-day.—*l would say there is very little difference between the two.” Can we take it that the shopping area on the eastern side of Lambton Quay between Grey and Panama Streets is of the first quality?—“Yes, there is a certain amount of catch trade from people going to and frqm the post office.” You agree that the shopping area from the T. and G. corner to Harcourt’s building is of the first quality?—"Yes.” And vastly superior to Waring Taylor Street?—“Yes.” And much superior to a shop in the P. and T. block? —"Yes, in the present building, because the building is unsuitable for the site.”' Grey Street Rentals. Even if a good building were put up it would be vastly superior? —“1 don’t agree.” Do you know what the shops in Grey Street are fetching to-day?—“No, not from memory.” Would you be surprised to know that £4/2/6 is the highest price they can get? —"Just at the moment that may be so, but what they are going to get next year might be different.” Do you know that the shops on the Quay between the T. and G. office and Harcourt's are fetching £6?—"lt depends on the frontage and depth. They should be bringing IU/- a toot.” Are you aware that the rates on the P. and T. site have risen from £llO/6/4 in 1914 tq £262/5/5 in 1936? —"That is quite possible.” You agree that rates are a serious item that a prudent lessee takes into account?—"Yes.” In reply to further questions, witness said he did not think that the large buildings now being erected would cause a shortage of tenants. A certain amount of letting space would be released if all the State departments were housed together m the new Government building. For some weeks he had had tenants seeking office accommodation. There were offices to let, but the rent was too high. Witness said he was satisfied that the whole of the shopping area in the next 10 years was going to consolidate between the Union Bank, Lambton Quay, Featherston Street and Waring Taylor Street. Mr. Treadwell: May I suggest you are a voice crying in the wilderness? —“No, thousands of people share the same opinion as I do." Wide streets were not a disadvantage from a shopping point of view; they were an advantage, witness said. The court adjourned until 10.30 a.m. to-day.