A near-new Browns Bay building with six ground-floor retail outlets and a childcare centre on the first floor is for sale, offering an opportunity for a new owner to add value by leasing two vacant tenancies or self-occupy.
The 625sq m two-storey building on a 2093sq m corner site at 41 Bute Rd is for sale by tender closing on September 11 unless it sells beforehand as part of Bayleys' latest Greater Auckland portfolio. It is being marketed by Simon Aldridge, Michael Block and Damian Stephen of Bayleys North Shore Commercial.
Aldridge said the property was producing net annual rental income of $349,105. The vendor would underwrite the rental on the vacant two ground floor units, totalling 197sq m, for six months from settlement.
"This will provide the purchaser with $445,345 plus GST net per annum for the first half year of ownership, giving time to find additional tenants.
"Or the buyer could choose to occupy that space and use the income from other tenancies to help pay the mortgage."
The steel portal-framed building was completed in early 2012 - so it complies with the current building code and has a seismic rating of 100 per cent of New Building Standard.
The main tenant is Lollipops Child Educare, which has a 12-year lease on the 430sq m first floor, with a 12-year right of renewal. The facility has consent to have up to 75 children.
The ground floor contains six retail units, ranging from about 70sq m to 184sq m.
Two units are leased to a fish and chip shop and Thai takeaway outlet for initial 10-year terms. Another two are occupied by a superette on a six-year lease and a fruit and vegetable shop, which occupies the largest unit, for an initial term of eight years.
All but one of the leases have two-yearly rent reviews to the Consumer Price Index (CPI) or to market, whichever is the highest and there are varying rights of renewal.
"The shops receive a lot of their business from parents dropping their children off at Lollipops, or picking them up, as well as from the extensive surrounding residential suburban catchment," said Aldridge.
"The property was designed and built to cater to the ever-growing number of people living in Browns Bay and surrounding areas and their need for convenience retailers such as a fruit and vegetable shop and takeaways. New apartment buildings are being constructed close to the shops on Bute Rd and Beach Rd."
Stephen said the property's high exposure corner profile location provided dual vehicle access from Beach Rd or Bute Rd. There was a service lane to the rear of the ground floor shops and ample onsite car parking.
"This property will suit long-term investors seeking a strategic corner land holding at the entrance to the popular seaside Browns Bay township which is known for its beach and cafe lifestyle," Stephen said.
"Other tenants in the area include all the major banks, boutique national and international retailers and office tenants."
There were seven titles in the property - the six retail units and the childcare centre each on separate unit titles.
"This allows a new owner the possibility of selling off the units individually. We have seen this happening a bit on the North Shore, with the auctioning of smaller retail units in the Wairau Junction, for example, and they have proved quite popular with smaller investors."
Block said the property had a mixed-use business zoning but had greater development potential under the proposed Auckland Unitary Plan because of its town centre zoning.
Under the new plan a network of town centres would be the focus of commercial, leisure, residential, tourist, cultural, community and civic services and activities for the surrounding area.
"A town centre zoning will enable the construction of buildings of between four and eight storeys, with increased office and residential living opportunities on upper floors," he said.
"Any future additional building would require resource consent to ensure that the design is of a high standard that enhances the quality of the town centre's streets and public open spaces."