Negotiations are currently under way for Ponsonby Central, which racks up an annual $5.2 million in rental income. Photo / Michael Craig
Negotiations are under way to sell Auckland’s upmarket Ponsonby Central dining and retail centre, which racks up $5.2 million a year in rent.
A spokesman for real estate agency Colliers confirmed to the Herald the property had not sold, but was under negotiation: “The property received multiple offers at the close of the campaign and … there are ongoing negotiations with the top bidders.”
The Ponsonby Central sale campaign closed on June 8, after owner Andy Davies decided to sell the $70m-plus property.
One of its selling points, according to Colliers, is its location, “situated in one of Auckland’s most prestigious districts”.
Colliers said the site “neighbours some of New Zealand’s wealthiest suburbs, including Herne Bay, St Marys Bay, Freemans Bay and Grey Lynn”.
The real estate firm said the median house price in the area was $2.41m, up 34 per cent from $1.8m three years ago, and was one of the Auckland suburbs with the fastest growth in capital values - an average of 9 per cent a year.
Colliers said retailing had a positive forecast and stable employment rate after the tourism and immigration rebound. The information memorandum for the sale said Ponsonby Rd had a retail vacancy rate of just 0.9 per cent, the lowest in central Auckland’s retail market.
While vacancy rates surged to 6.9 per cent during the pandemic, Colliers said numbers had dropped to 4.8 per cent by 2021.
The downward trend signified the rebound and significant demand to re-enter the suburban market, Colliers said.
The company said that low vacancy level had the potential to drive up local retail rents, although retailers in Aotearoa have expressed concerns about trade.
Retail and hospitality trade may be a less secure income source in the coming months: while business confidence has jumped slightly, it is still at low levels and there is growing concern among retailers about how trade will look in the face of a continuing economic downturn.
NZIER’s business confidence survey for the June quarter showed retailers were the most downbeat group despite overall confidence improving slightly, and a bigger proportion of businesses expected their own activity to decline in the next quarter.
The retail sector was the least optimistic of those surveyed in the June quarter, with a net 64 per cent of retailers expecting a worsening in the general economic outlook.
“While cost and price pressures are falling, this environment of weaker demand is weighing on the sentiment of retailers,” said NZIER principal economist Christina Leung.
Some retailers at Ponsonby Central, however, say the hub is a luxury precinct where customers are still flocking to treat themselves.
Others reckon the complex has not seen the same numbers that it attracted before the pandemic, while some are in a state of flux because of the “pop-up” nature of the retail space.
According to Colliers, revenue streams for the property are diverse. Whoever buys Ponsonby Central will be able to cash in on retail space, office tenancies, car parking, signage, and even a penthouse apartment atop the property at 8 Brown St.
It all started with 4-6 Brown St, formerly home to Allen’s Calendar Printing Works, refurbished into the site’s hospitality and retail precinct.
That original building opened as Ponsonby Central in 2012. The precinct is intended to be “a global dining experience, a place where you feel invited to come, stay and bring your friends to experience Auckland at an international level”, according to Davies.
Some of the popular eating and drinking establishments include Blue Breeze Inn, Gaja, Burger Burger and Chop Chop, with Blue Breeze taking up 3 per cent of the total net lettable area.
Overall, retail space makes up 2346.3 square metres of the 2870.5sq m redeveloped property at 4-6 Brown St. Retail is also the biggest earner at Ponsonby Central, delivering a yearly rental income of $2.1m. Pop-up stores and short-term tenancies make up 140sq m of floor space, with a total of 2 per cent of net lettable floor space. That space is projected to contribute $149,836 in income and houses six tenants.
The second floor of 4-6 Brown St houses offices, with tenants including Jessop Architects, Coalface Consulting and Redwood Trustees as well as the Sapphire Room, a large event space that takes up almost 400sq m.
Next came the six-level 8 Brown St, a new building that was added to the precinct last year, although work started about three years earlier.
Building the block of almost 4000sq m meant excavating to create a big new basement carpark, building one level of retail and hospitality space above, then a level of offices and a top-level penthouse.
That work created controversy in 2020 after locals said construction caused hundreds of thousands of dollars worth of “earthquake-like” damage to their properties.
At the time, Davies said he wanted to “stand by” the local residents and be a “good neighbour”.
“We will work to rectify any damage once the works are complete, but it is now really in the hands of the insurance companies,” he told the Herald in 2020.
The construction paved the way for an underground parking level that includes 83 parking spaces - 18 leased and 65 casual spots.
The leased spaces can generate a yearly income of almost $68,000, while the projected income for casual spaces is about $400,000.
The 8 Brown St property’s second highest earner is cinema Silky Otter, which occupies 862.6sq m. Delivering a total yearly income of $472,000, the theatre occupies 13 per cent of Ponsonby Central’s net lettable area.
The Silky Otter cinema chain first opened in 2019 at Ōrākei Bay Village and is now found in Queenstown, Nelson, Christchurch and Ponsonby Central.
According to Colliers, the cinema offers four auditoriums, each with a capacity of 28 seats, and fitted with leather recliners, surround-sound technology and laser projection screens.
On top of a full-service bar, the cinema boasts an “SO Lounge”, an outdoor space to enjoy drinks and chef-prepared meals which can otherwise be delivered to your cinema recliner.
After Silky Otter, Ponsonby Central’s next biggest earner, with a yearly income of $1.5m, is its office space, which makes up the majority of the area at 2928.5m2.
Now housing audio software company Serato and healthcare supplement company Be Pure, the property has nine office tenancies.
Ponsonby Central also comes with its own penthouse apartment, occupying the entire third floor of 8 Brown St. An additional $239,200 in yearly income is expected to come from the apartment, where the weekly rental income is $4600. The three-bedroom, two-bathroom apartment offers 270sq m of indoor space as well as a 334sq m “living roof”.
The home’s design matches Ponsonby Central’s rustic exterior, with timber flooring, concrete walls and industrial steel frames, while the roof comes with plants, artificial turf and paved pathways.
Davies developed the apartment for himself and his partner, but found he didn’t spend much time there. These days, he runs an animal rescue centre in the country and realised he did not use the penthouse much, so he rented it out and it is also for sale, he told the Herald in May.
Hotels in Auckland, Rotorua, Wellington, Christchurch and Queenstown are to be sold.