Newmarket properties feature of Bayleys’ portfolio

5:00 AM Saturday February 20, 2016 Colin Taylor

National retailers Bed Bath & Beyond and Kitchen Things occupy the two-level building at 34 Morrow St, Newmarket.

Two retail offerings in Newmarket and a development site on Beach Road in Auckland’s CBD are among 14 commercial and industrial properties featured in Bayleys’ Greater Auckland portfolio that will go up for auction early next month.

The largest of the three properties is a 640 sq m two level building at 34 Morrow St, Newmarket, which is fully leased to two tenants and is producing net annual rental income of $218,820 plus GST. The Morrow St property will go under the hammer in Bayleys Auckland auction rooms on March 2 unless it is sold earlier by private treaty.

“This is an outstanding city fringe offering in the tightly held and sought after Newmarket precinct,” says Kate Kirby of Bayleys Auckland. “The building has been meticulously refurbished over recent years and offers superbly presented retail and showroom spaces. In a suburb where parking is at a premium, there is also the added bonus of 10 on-site car parks at the front doorstep.

“The property is also very strongly located on a large 754 sq m freehold site with huge corner profile to both Morrow St, which connects with Broadway, and Gillies Avenue which carry large volumes of traffic. The property is adjacent to the TwoDoubleSeven Westfield Shopping Mall and has easy access to the Gillies Avenue motorway interchange and Newmarket train station.”

The building’s 355 sq m ground floor is occupied by national manchester retailer Bed Bath & Beyond which has 54 stores throughout New Zealand. It has a six year lease which expires in August 2018 with no rights of renewal.

Kirby says this gives an investor or developer purchaser the flexibility of possibly negotiating a new lease with the incumbent or looking at other options. She says it also increases the property’s appeal to an owner occupier looking for a substantial amount of high profile ground floor retail accommodation in Newmarket.

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This shop at 153 Broadway is leased to multinational fashion retailer Cotton On. 

The 285 sq m upper floor is occupied by Kitchen Things which has a four year lease from April 2014 plus two four-year rights of renewal. The national retailer specialises in kitchen appliances and has 19 stores and showrooms around the country.

Kirby says the two tenancies benefit from excellent natural light and pleasant outlooks because of the building´s standalone corner position.

She says the property’s favourable Mixed Use zoning will be further enhanced by the Proposed Auckland Unitary Plan (PAUP) which will provide more development flexibility. The Mixed Use zoning under the PAUP encourages a mix of compatible residential and non residential activities and increases the height limit for development from 15 metres to 16.5 metres. Floor area ratios will also be removed under the PAUP zoning and development will be subject to maximum height and setback controls.

“In recent years there has been increasing development activity in Newmarket with the addition of major new commercial buildings, refurbishment and expansion of existing buildings and a substantial increase in the number of residential apartments,” Kirby says.

“The current redevelopment of the nearby 5.2 hectare former Lion Brewery site by the Auckland University into a new campus will further enhance the precinct and result in additional complementary development.”

Also up for sale at the same auction is a prime retail offering on Newmarket’s sought after Broadway shopping strip with a neweight year lease to multinational fashion retailer Cotton On.

The 186 sq m shop located at 153 Broadway is producing net annual rental income of $158,780, with built in rental growth provided by fixed annual rental increases based on the Consumer Price Index plus one per cent. The property is being marketed by James Chan and Matt Lee of Bayleys Auckland’s International Division.

“This is exceptional investment opportunity with a long-term lease to a well-established global fashion brand situated in the heart of Newmarket, with massive exposure to one of New Zealand’s premier shopping strips,” says Chan.  
He says a substantial brand new fit out was undertaken for Cotton On’s arrival in September last year. Founded in 1991, the Cotton On Group has grown to become one of Australia's largest fashion groups, with eight brands in over 1300 retail stores in 17 countries, including 101 stores in New Zealand.

Chan says the Cotton On brand itself has a strong presence, with 19 stores across New Zealand. Five new stores, including the Newmarket shop, were opened late last year to make the most of the Christmas shopping period. The Cotton On Group says it plans to grow its New Zealand business by 50 per cent over the next three years through an increased number of stores and its e-commerce platform.  

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The freehold site at 31 Beach Rd is leased to rental car company Hire Ace.

Mark Singleton, country manager for Cotton On New Zealand, says this will create over 900 new job roles across retail, design, marketing, digital, e-commerce and logistics. Singleton says a new head office in central Auckland will meet the specific needs of its New Zealand operations and drive the growth strategy in this country.

Michael Hardwick, chief financial officer for the Cotton On Group, says its ongoing investment in New Zealand is testament to the strong results the country continues to deliver. “New Zealand was the first international market we entered outside Australia back in 2006 and is one of our top three performing countries globally. As a result, it continues to be one of the markets we look to when gauging customer reaction – whether it’s new products and collections or new store design.”

Lee says the Cotton On store is positioned in a prime positon on the Broadway frontage of the Rialto Centre. The centre has access from both Broadway and Osborne St, a cosmopolitan retail strip offering a pedestrian lane shopping experience at the rear.It has a mix of fashion, homeware and lifestyle stores on the ground floor, with the seven screen Rialto cinema complex and a foodcourt on the upper level.

Lee says the centre’s main entrance is strongly positioned at the cross roads of two major arterials, Broadway and Khyber Pass, and is located on the sought-after western side of Broadway. “The area is home to many of the larger, longer term tenants in Newmarket and also has the heaviest foot traffic.”

Chan, in conjunction with colleague Oscar Kuang, is also auctioning an Auckland CBD development site on March 2. Located at 31 Beach Rd, the freeholdsite of 288 sq m is currently leased on a short term monthly basis to rental car company Hire Ace which is providing net annual holding income of $85,000 plus GST.

“Situated on one of the busiest arterial roads in downtown Auckland connecting the CBD with Parnell and the motorway network, the property offers an excellent opportunity for astute investors or developers to add value to the site,” says Kuang.

“The property is located opposite the Scene Apartments complex and a Countdown supermarket and is well positioned between the Britomart transport centre and ferry terminal and Auckland University.”
The property currently has a Strategic Management Area 2 zoning and Chan says its development potential will be enhanced under the Proposed Auckland Unitary Plan, with an increased height limit of 50 metres.

The neighbouring property at 29 Beach Road comprising 245 sq m of land, with a three level commercial building with short term tenancies, sold just before Christmas by Nigel McNeill of Bayleys Auckland office for $2,550,000 at a land value of $10,408 per sq m. 

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(From left to right) Kate Kirby, James Chan, Matt Lee, and Oscar Kuang, of Bayleys Auckland.