Morningside property has differing tenants
The building at 617-619 New North Rd is leased to cafe Peel to Pip. Photo / Supplied
A freehold property encompassing two different buildings, leased to a cafe and a workers’ union, and with two highly-visible street frontages to New North Rd and Western Springs Rd, is for sale in the Auckland suburb of Morningside.
The 943sq m property also has six car parks, says Alex Wefers of JLL who, with colleague Jarred Hill, is marketing 617-619 New North Rd and 6A Western Springs Rd through an expressions of interest campaign closing on April 28.
Wefers says the buildings have a combined floor area of 505sq m and generate $108,398 in total net rent annually. Both leases have final expiry dates in 2024.
Cafe Peel to Pip occupies a timber clad villa-style building at the front of the property facing New North Rd. The building also contains a two-bedroom apartment which is rented by the cafe tenants.
“Peel to Pip is a popular local cafe operated with a sustainable ethos and focused on serving ethically-sourced dishes in a sun-filled dining area,” Wefers says. The cafe is on a three-year lease from September 2015 with two rights of renewal of three years each.
The rear building, at 6A Western Springs Rd, is made of timber framing and brick cladding, and is tenanted by Unite, a workers’ union, which has occupied it for more than 10 years. The union advocates for employees working in industries like hospitality, entertainment, healthcare and retail. Unite’s lease runs for 10 years from March 2014 with no rights of renewal.
Wefers says that the property’s two income streams give buyers a split-risk opportunity.
“Income from two established tenants make this an attractive investment,” he says. “Both lease agreements provide fixed growth with bi-annual rent reviews that are linked to the Consumer Price Index and a minimum 2 per cent increase.”
Unite, a workers’ union, rents the rear building, at 6A Western Springs Rd. Photo / Supplied
Hill says the property has redevelopment potential in the future, once the leases expire in 2024.
“The property has favourable zoning under the Unitary Plan. It falls under the Local Centre Business zone, which allows for a mix of retail, office, food, beverage, apartments and commercial services. Developers may also build up to 18 metres in this zone.”
Hill says city fringe locations like New North Rd are consistently popular with tenants, investors and developers. “The property is strategically located with excellent access to public transport links, local retail, food and beverage amenities,” says Hill. “It is around 1.2km to the State Highway 16 northwestern motorway system; a 12-minute walk to Kingsland village, and only a few minutes’ walk to Morningside railway station. Access to Auckland city and other suburbs will improve further once the City Rail Link is complete.”
Wefers says the local area is undergoing significant development and population growth. “A new apartment complex is planned for 580 New North Rd and a craft brewery is due to open at 597 New North Rd by the end of April.”
He says population forecasts by Statistics New Zealand indicate that the number of residents will increase by 13,000 between 2016 and 2043 - equating to a 32.1 per cent boost - and this is expected to further boost the value of the property.