Southern Cross is a star in portfolio
The Southern Cross Building which is for sale at 87-93 Main Highway, Ellerslie.
A landmark property in Ellerslie Village, the four level Southern Cross Building which was once a cinema, is up for sale offering annual net rental income of $411,001 from four tenancies.
The 1208 sq m character building on a 439 sq m site at 87-93 Main Highway, Ellerslie, is featured in Bayleys’ latest Total Property portfolio and is being offered for sale through Sunil Bhana, James Hill and Mike Houlker of Bayleys Auckland. It is up for tender, closing October 29 unless sold prior.
“This historic Ellerslie building underwent a major upgrade four years ago and has massive exposure to northbound traffic on State Highway One and to Main Highway – the main strip retail precinct of Ellerslie Village,” says Bhana. “The split risk investment property earns multiple income streams in a popular location and benefits from the surrounding residential catchment along with having easy access to main arterial routes and public transport.”
The building was originally developed in 1925 by the Bew family as the Southern Cross picture theatre and it operated as both an entertainment centre and movie theatre until it was closed in 1962. The upper levels were converted to squash courts in the 1970s and the building underwent a substantial transformation in 2011 when it was extensively reconfigured and comprehensively refurbished and seismically upgraded to A Grade standard by Broadway Developments.
“This totally repositioned and revitalised building has attracted new tenants on long-term leases,” says Bhana. “The property also offers one of the most prominent billboard positions available in Auckland.”
The building has two ground floor retailers. Glengarry Wines, which has 18 outlets in Auckland and Wellington, occupies 185 sq m on an eight-year lease until August 2019, with further rights of renewal. The Ellerslie Bakery occupies the remaining 167 sq m on the ground on a lease which runs until 2025 with two five year rights of renewal.
The third tenant, a fitness centre, has a lease until 2023, with one six-year right of renewal, on 855 sq m over the upper three levels. It has its own access from Main Highway through a tiled entry foyer with a Schindler lift and stairs, installed in the 2011 rebuild, providing access to its floors.
Additional income is provided by Billboard Investments Ltd which leases the 12 metre by five metre high profile billboard space on the rear wall which was used for Tui’s “Yeah Right” advertising campaign for many years. The lease has been renewed for a further term of six years.
Elevated view of 87-93 Main Highway depicting its location within Ellerslie town centre.
Bhana says in addition to the long leases, another attraction of the property for investors is its built in rental growth, with a two yearly fixed increase on the bakery lease and two yearly fixed rent increases to the Consumer Price Index (CPI), plus an additional one per cent per annum, on the two largest leases to the fitness centre and Glengarry.
“This means rental growth will outstrip inflation which should generate considerable value for an investor buying this property as a long term investment,” says Bhana.
“Because of the high standard of the redevelopment, the purchaser will be inheriting a highly specified, near new building. The seismic upgrading has included a new ground floor with reinforced foundations and a concrete lift well that also acts as a structural core for the building. A complete electrical rewiring and new ventilation and air conditioning systems were also installed and the building was also completely repainted externally and internally.”
New floor to ceiling glazing was installed on the retail frontage with automatic glass sliding doors leading into each of the tenancies. On the upper floors new windows and joinery have been installed and new skylights added to the roof. Timber from the old floors has been recycled and used to line the underside of the roof to enhance the character features of the building.
The property occupies a prominent position at the northern end of Main Highway and has frontages to both Main Highway and Findlay St at the rear, with good public parking on both streets.
Hill says bus services are located in front of the building and the Ellerslie Train Station is situated about 100 metres to the west of the property, accessed via a footbridge crossing State Highway 1. This is used by thousands of commuters and workers in the nearby office parks who frequent the Ellerslie Village daily.
He says Ellerslie’s Main Street is a tightly held retail strip, which generally has little vacancy and services the large surrounding residential catchment as well as the wider commercial and industrial areas of Penrose and Mt Wellington.
“There is a mixture of boutique specialty stores in addition to national brand tenants as well as a variety of cafes, restaurants and bars which give a busy and vibrant tone to the village.
“The Ellerslie shopping strip is flanked by the southern motorway section of State Highway One on one side and residential streets on the other so there is little room for outward expansion which works to the advantage of existing property owners.”
Sunil Bhana (left) & James Hill (right) of Bayleys.
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