Retail properties have potential
The Hotel Grand Chancellor building at 1 Hobson St.
Four retail properties in central and south Auckland which are part of a large portfolio owned by a private investor are among a range of properties featured in Bayleys’ latest Total Property magazine which will go up for auction later this month.
Bayleys’ International Division is auctioning the four properties on October 26, unless sold earlier by negotiation.
International sales director James Chan says two are for sale with vacant possession and the other two are split-risk investment offerings, with multiple tenancies and rental upside potential.
“They provide opportunities for owner occupiers as well as investors looking for offerings that provide an initial high return and the potential to add value in the future,” says Chan.
The largest is an 1124sq m fully leased retail and office unit next to a New World supermarket and the entranceway to the Southmall Shopping Centre at 185-189 Great South Rd, Manurewa. The property is generating annual rental income of $215,921.
“It is one of largest units in this popular community shopping centre and is in a prime position between the supermarket and the mall entrance, offering excellent signage exposure,” says Oscar Kuang who is marketing the property with Nicolas Ching and Piyush Kumar of Bayleys South Auckland office.
“It’s opposite the renovated Manurewa train station and public transport hub, with ample customer carparking outside as well, which provides excellent accessibility.”
There are nine tenants with ground retail occupants including a bakery, coffee lounge, hair salon, home and living store and a computer repair store and internet cafe. The anchor upstairs tenant is the shopping centre’s management office and there are also a legal practice and a nutritionist. “The lease terms are from two to 10 years, with the majority five years and over,” says Kuang. “Three of the leases already have built in rental growth with fixed increases based on the Consumer Price Index increase plus 3 or 4 per cent. A range of expiry dates offers flexibility to look at opportunities to increase income from other leases as well.”
The building in the heart of Otara’s town centre.
Otara Town Centre
The other multi-tenanted income generating property in the portfolio is a 980sq m standalone building on a 501sq m site at C in the heart of Otara’s town centre. It is generating net annual rental income of $174,702 plus GST.
The ground floor space is fully leased on to three to six year terms with a butcher, in occupation since 2001, the largest tenant. Other occupants are the TAB, a pizza outlet and a discount store. The previous occupant of the upstairs premises, a night club, has relocated leaving 485sq m of space available for immediate occupation. Kuang, who is marketing the property with Ching, and Janak Darji, Bayleys South Auckland says it has add-value angles.
“The vacant, fully licensed upstairs premises could appeal to an owner-occupier and offers an opportunity for investors to immediately increase the income by leasing up the vacant space or possibly converting that floor to residential use. The property has a Town Centre zoning under the new Unitary Plan with a height limit of 16m. This means you could also potentially go up a further two levels. The zoning encourages residential use on upper levels.
“Although there is no body corporate at present, the property was subdivided into five unit titles in 1991 which match the tenancies currently in place. This provides additional flexibility for the next owner to possibly on sell some or all of these titles to owner-occupiers or investors. In particular, this would provide a purchaser intending to occupy the upper level with increased future options.”
The property is within Otara’s main retail precinct and has frontage on to a council carpark.
Two at Papakura
In central Papakura, one of the two vacant offerings is on a site that has a height allowance of 40.5 metres under its Unitary Plan Metropolitan Centre zoning. It encompasses two adjoining buildings totalling 569sq m on 488sq m of land in two titles at 28 and 30 Broadway which are being marketed by Kuang, Chan and Peter Migounoff, Bayleys South Auckland.
There is a 100sq m shop at 28 Broadway and another 120sq m retail area plus 40sq m of office on the ground floor of 30 Broadway which was previously occupied by a restaurant. The two buildings share the upper level office floor area of approximately 150sq m which is fully self-contained with separate access, toilets and a kitchenette. There is rear access to the buildings and parking via a service lane.
Chan says the vacant property could generate projected rental income of around $80,000 a year fully occupied. The upper floor also has possible future residential conversion potential, and the unitary plan zoning could potentially allow future development up to 10 storeys high.
The property at 185- 189 Great South Road.
Migounoff says Auckland Council has clearly signalled its intention for Papakura to be developed as a major business and community centre for the south as it is one of only 10 commercial precincts which have been given a Metropolitan Centre zoning in the unitary plan. Botany and Manukau are the only other designated southern town centres and Papakura is the southernmost.
“This is a significant turning point for Papakura and signals the implementation of a planning regime that will encourage higher density residential living in the town centre and a public investment strategy to position Papakura as an important business zone for the south of the region,” says Migounoff.
1 Hobson St
The other vacant property for sale is a 320sq m street level retail unit in Auckland’s CBD. At 1 Hobson St, it was previously a restaurant and bar and has a centrally located commercial kitchen.
Millie Liang, who is marketing the unit with Kuang and Chan, says it is within the Hotel Grand Chancellor building at the intersection of Hobson and Fanshawe Streets and previously operated as the hotel’s bar and restaurant. “It was fitted out to complement the high standard set by the hotel, with the kitchen strategically located between the bar, restaurant and conference room, with a large exclusive patio area providing excellent indoor/outdoor flow.”