Auction offers chance for city-centre presence

This site in Auckland's Dilworth Building is going under the hammer. Photo / NZ Herald

Six properties located in central Auckland offering smaller investors exposure to the bustling CBD retail market will go up for auction early next month.

The properties are among more than 30 to go under the hammer as part of Bayleys Realty Group's end-of-year Total Property portfolio in its Auckland auction rooms on December 2.

A 154sq m outlet, one of a number of ground-floor retail units in the landmark Dilworth Building on the corner of Queen St and Custom St, is up for auction with a new eight-year lease.

The lease to D-Town, trading as the City Star internet and Convenience Store, runs until May 2018, with one six-year right of renewal and two-yearly rent reviews. It is producing net annual rental income of $120,000.

The unit at 9 Customs Street East is being marketed by James Chan and Quinn Ngo of Bayleys Auckland office.

"The Dilworth building is at the gateway to Queen St and opposite Queen Elizabeth Square and the Britomart Transport Centre and is on one of the most heavily used pedestrian intersections in New Zealand," said Chan. "This area is considered to be one of the best retail locations in Auckland's CBD."

The 154sq m unit consists of the ground floor convenience store of close to 80sq m and a mezzanine level of 43sq m which provides internet computer access, catering predominantly for visitors to Auckland.

Chan and Ngo are also marketing a smaller retail outlet with frontage directly on to Queen St in the Mid City building. The 39sq m premises at 239 Queen St are occupied by Mid City Kebab, with fit-out including extensive commercial cooking equipment. Its current lease runs for four years from September 2007, with two further rights of renewal of four years each, and is producing net annual rental income of $86,901.

Chan says in addition to offering smaller investors affordable access to retail property in the heart of Auckland's CBD, the unit comes with assured rental growth built into the lease. There is an annual fixed rental increase of 2.2 per cent.

In June, Chan was involved in the sale of a 79sq m retail outlet two doors along on Queen St and also in the Mid City building for $2.67 million. The property, occupied by the Flight Centre and Subway, sold at Bayleys' mid-winter Total Property auction at a 6.4 per cent yield to a local investor.

Another CBD offering which is also expected to attract interest from smaller investors is an 83sq m cafe located at 9-11 Victoria Street East, a short stroll from Queen St. It is currently producing net annual rental income of $45,622 on a three-year lease to Victoria Cafe, with two-yearly rent reviews and two rights of renewal of four years each.

Located next to the entrance to the refurbished Lister Building, the cafe is situated between Queen St and High St, popular with boutique fashion stores, and is also close to the University of Auckland.

Quinn Ngo, marketing the unit in conjunction with James Chan, said it was tenanted by an authentic Asian food cafe and restaurant.

"It's not often that property at this rental income level becomes available in the CBD, which makes it very attractive to smaller investors looking for exposure to one of the most sought after sectors of the retail market," said Ngo. "The premises are well presented and are surrounded by a wide range of other retail outlets and commercial properties in a busy part of the central city."

At the other end of Victoria St, a recently completed three-level 531sq m building on the corner with Nelson St will also go under the hammer.

John Jefferson, of Bayleys Auckland, said the current owner has added two floors to the existing building to maximise the highly exposed 228sq m corner site's profile to the high volume of passing traffic, with Nelson St being the main one-way arterial route from the southern and northwest motorway off ramps into downtown Auckland City. Victoria St West is the main dual route from the western suburbs of Ponsonby, St Marys Bay and Pt Chevalier.

There are five signs each leased for five years to I-Site, on a percentage of income basis, with the building's owner receiving 65 per cent of the income. The vendor is also offering a year-long rental guarantee over the two office floors that have just been completed. Jefferson said the upper floors offered good quality, new office space with French doors to outdoor balconies on both floors. The first floor offers 160sq m of space, which includes a 15sq m covered deck, and there is 86sq m of partitioned offices on the upper floor plus a 20sq m deck.

The Pastis French provincial restaurant, bar and cafe has been operating for more than two years from the 165sq m ground floor of the building and caters for both daytime CBD workers as well as evening diners. Jefferson said the new Four Tower Telecom Centre, which is being developed nearby on Victoria St, will accommodate more than 2300 people adding to the high density of workers already based in the area. Pastis has a three-year lease until April 2010 with two-yearly rent reviews and three rights of renewal of three years each.

annual income from the property, located at 128-132 Victoria St West, is approximately $237,255.

The sixth CBD building to be auctioned is a 150sq m character building at 456 Queen St from which the existing liquor store business, Liquor.com, has been operating for more than five years.

Located on a prominent corner position, at the intersection with Turner St, it is producing net annual rental income of approximately $50,000. The existing three-year lease, which also includes two carparks, runs until July 2010, with two further rights of renewal of three years each. Rent reviews are two-yearly.

Kate Robinson, who is marketing the property with Alan Haydock, also of Bayleys Auckland office, said the property was strategically positioned among a number of high-rise apartment buildings, with more than 1100 units estimated to be located within a short walking distance of the property.

"These provide a major source of regular patronage and its corner positioning means it also benefits from high exposure to the heavy traffic flows which travel along Queen St."

The property is part of a landmark complex of shops that were built in the early 20th century with its construction being typical of that area, comprising solid masonry material and a character facade.