A freehold industrial unit occupied long-term by a mechanic, and with significant potential rental upside, is for sale in the Auckland city fringe suburb of Grey Lynn.
"The tenant has been in business for nearly 20 years, with the last 12 years on site," says Alex Wefers of JLL who, with colleague Jarred Hill, is marketing 30A Pollen St for sale by expressions of interest closing Thursday October 26 - unless it sells earlier by negotiation.
"Built in late 1980s, the majority of the unit comprises workshop that is largely open plan with concrete floors and walls; and an exposed ceiling with suspended fluorescent light fittings," Wefers says.
The unit is on the ground floor of the three-level building and comes with four carparks. It also has office, kitchen and bathroom space with access via a pedestrian door and through a roller door. The property, with a seismic rating assessed at 90 per cent of the New Building Standard (NBS), is divided into four unit titles, says Wefers.
"There's another commercial unit on the first floor and two residential units on the second floor with the carparking in the basement."
The property is zoned Mixed Use and has a height variation of 27m, allowing for higher density building in the future.
"This type of investment is an excellent find, with industrial properties being few and far between in a premium inner-city suburb like Grey Lynn," Wefers says. "The high NBS shows the property is structurally sound which is a real positive when it comes to bank lending."
The property now earns $68,000 net per annum, with market rent reviews every two years. The current lease term is eight years, with six years remaining, expiring in October 2023.
"The property has immediate rental upside, with the next market review due this month," says Wefers.
"This gives the new owner the immediate chance to assess the market rental and negotiate a new rent figure. The lease also provides personal guarantees from experienced business owners to de-risk this investment for the buyer."
Hill says the tenant has invested a significant amount in the location - building up his client base and a name for his business in the area.
"This is a solid offering and a great investment for the right buyer. We sold a similar property not long ago and interest was very high. We expect this property will draw a lot of interest from the investor community given the long-term security this property offers. There is also a lot of development going on in the nearby vicinity which adds to the appeal of the property."
Hill says the property will benefit from being near to a Countdown supermarket, which is part of the Cider Building development, that is also home to Fairfax Media, 11 shops and several other businesses.
Another development close by is the mixed-use Vinegar Lane project designed to include retail, offices and housing components.
"Across the road at 23 Pollen St is the newly opened Pollen Street Apartments and, only two doors up at 22 Pollen St, is an office development under construction planned to house a number of businesses within a 4000sq m space."
He says the unit for sale at 30A Pollen St is a short walk to the Ponsonby Rd shopping area and is close to Grey Lynn village.
It can be entered from both Williamson Ave and Great North Rd, is served by regular public transport links and has quick motorway access to the west, north and south.
Tom Barclay, JLL's associate director of research and consulting, says rising rents and positive net absorption of industrial space indicate strong occupier demand for city industrial space.
"This has been supported by the underlying strength of the economy, and the high-performance manufacturing sector, which has translated to expansion plans for a number of occupiers," Barclay says.
"Vacancy rates are very tight at 3.5 per cent - well below the post global financial crisis average of 4.8 per cent.
"Supply is increasing to meet demand although the majority of development is focused around the Penrose and Mt Wellington areas, making industrial units like this one so close to the Auckland CBD a rare commodity."