A Browns Bay beachside retail building at 55 Clyde Rd, which is occupied by national brand-name tenants on long leases, is being offered for sale by auction on behalf of Viaduct Waterfront Investments Ltd.
The North Shore investment property is being marketed by Tony Allsop, Andrew Hiskens, and Tim Lichtenstein of Colliers International, and is due to go under the hammer on July 25 in Colliers' offices at 151 Queen St, Auckland, unless sold prior.
The 1200sq m two-level building houses four units occupied by NZ Post, Starbucks, AMI Insurance and a first-floor bar. Together the tenancies generate net annual rental income of $346,000.
The property is an excellent long-term investment holding but also has redevelopment potential, Allsop says. "Current zoning makes the site a great development opportunity, with the possibility of constructing a mixed-use property of up to four storeys high. Such a development could feature retail and/or hospitality premises on the lower floors with apartments above, for example."
There is also great potential to capitalise on the views and aspect of the property on both existing levels, Hiskens says. "Many properties on Clyde Rd are being reconfigured to face the Hauraki Gulf and make the most of the attractive beachfront location like the popular beach-facing cafes already operating along this strip."
The 1980s building, which sits on a high profile 852sq m freehold site in the centre of the busy Browns Bay commercial centre, was altered and redeveloped in 1993.
The ground floor houses three retail tenancies, with NZ Post occupying the beach-side unit, Starbucks the corner unit with frontage to Clyde Rd and the pedestrian mall, and AMI next door along the Clyde Rd frontage.
The existing leases provide a very strong tenant covenant, Lichtenstein says. "The building area is 31 per cent leased to NZ Post, with a further 32 per cent leased to AMI Insurance and Starbucks, both of which are backed by major parent companies. The leases all have rent reviews built in, giving the potential for income growth in the future."
NZ Post occupies a 365sq m unit on a nine-year lease term expiring in May 2018, with two further rights of renewal of three years each. AMI occupies 184sq m of floor area on a 12-year lease expiring in February 2017, with the right to renew for two further terms of three years each.
Starbucks occupies a 201sq m unit on a 10-year lease expiring in February 2019, with two further rights of renewal of six years and five years respectively.
The 447sq m upstairs unit is home to Echo Bar, which offers live music, gaming, food, and private functions. A large balcony offers unobstructed views of Rangitoto Island and the Coromandel Peninsula. Echo Bar has a three-year lease which expires in April next year.
John Bowring, national auctions manager at Colliers International, says the four separate income streams offer security to investors. "Three out of the four leases are in place for extended periods, offering long-term income to investors, while the upstairs unit, with its views and outlook over the beachfront promenade, offers plenty of potential for future occupiers to make the most of this popular location should the existing tenant move out."
Although Browns Bay is a coastal suburb, it benefits from good motorway and public transport links, making it a sought-after location among retail and commercial tenants.By Colin Taylor Email Colin