A North Shore retail investment property in the main shopping strip of Browns Bay has been placed on the market for sale by auction opening up the possibility for the 764sq m site to be redeveloped.
The freehold property at 14 Clyde Rd is currently leased to discount retailer Sunny's Variety Stores and generates a net rental income of $158,790 per annum.
Featured in Colliers International's latest National Portfolio magazine, the building is being marketed by Deborah Dowling and Euan Stratton of Colliers International's North Shore office and is scheduled to go under the hammer on Wednesday, August 29 at 151 Queen St, Auckland, unless sold prior to auction.
Dowling says the sale offers an "excellent opportunity to own quality commercial property in a fast growing and popular suburb."
She expects the potential for added value to the property via future redevelopment will be attractive to buyers along with possible rental growth in the short to medium term.
"Redevelopment of the property, subject to relevant consents, could add significant value and also improve the property's income stream," Dowling says. "With zoning allowing developments of up to 9m, the future owner could construct a mixed-use street level retail and upper office complex."
She says the property is expected to attract significant interest because it is unusual for a retail property of this size and calibre to come on the market, surrounded by national and international retailers in a busy seaside shopping area.
Stratton says the 1970s building contains almost 750sq m of floor area across one and a half levels, and was previously home to a BNZ branch. It was significantly refurbished in 2009 after the bank moved out.
"The building has open plan retail space on the ground floor, with further offices, amenities and storage areas upstairs. It also has both front access for retail customers and rear access for loading - which could be converted to a future entry in the event of a redevelopment."
There are six on-site car parks to the rear of the building and plenty of public car parks surrounding the site, including a public car park backing on to the building.
"The property's single, stable tenant provides a passive investment with the minimum of management," Stratton says.
Sunny's Variety Stores' lease expires in October 2015, with the right to renew for two further terms of six years each. The company, which has been operating since 1995 as a successful discount retailer, operates five other North Island outlets: in Mercury Bay, Whangamata, Mt Maunganui, Paeroa and Wanganui.
John Bowring, Colliers International's national auction manager, says the property represents a passive, "hands free" retail investment opportunity in an affordable price bracket that should not be overlooked as a future-proofed income-generating investment. "It has the potential to be a great little earner and is a conservative investment holding suitable for a wide range of investors."
The site is zoned Business 2, which under the Auckland Council district plan aims to manage suburban centre activities in such a way as to help minimise average vehicle trip lengths, mitigate any adverse effects of business activity on surrounding residential areas and ensure that new developments integrate well with existing developments. Key policies include enabling substantial retail provision in suburban centres including food outlets, as well as enabling a wide range of other business activities.
"The property is situated in a high profile location surrounded by a fast-growing, affluent residential catchment," Dowling says. "It is in an excellent spot which benefits from pedestrian and vehicle traffic volumes passing along Clyde Road at the centre of the established Browns Bay shopping precinct. The area is also home to well known brand-name tenants like ANZ, OPSM, Flight Centre, Pizza Hut, Paper Plus, Westpac, ASB and many more.
Stratton says Browns Bay is only 19km and a 20 minute "off peak" drive from the Auckland CBD.
"Future development along Clyde Road is also on the cards, which will further open up the commercial precinct to the popular beachfront."