The centre was constructed in 1977 and expanded in 1997 with an entry upgrade in 2007. It occupies a freehold site area of 2.1568ha on the corner of Great North and West Coast Rds. Entrances and exits from both roads feed into a parking area for 410 cars and covered basement parking spaces for another 190 vehicles.
About half of the specialty stores trade in an enclosed mall next to the supermarket, with the remainder trading directly on to the car park.
Hargreaves says the centre has a weighted average lease term (WALT) of about 7.7 years, with a new lease agreement recently signed by Countdown for a 15-year term. Two further terms of 10 years each have been negotiated with a final expiry in2046.
The 24 specialty stores have varying lease terms ranging from three to six years. McDonald's recently signed for 10 years, with two five-year renewals, and the Mobil Service Station has a final expiry in 2016.
"The total net annual operating income is approximately $2.25 million, with rent review provisions typically on annual Consumer Price Index increases, fixed increases and market reviews," Hargreaves says.
"The strength of this asset is showcased by the strength of its occupancy, the WALT, its ideal location, and its current and potential future rental turnover supported by a captive catchment area.
"The Kelston Shopping Centre is situated in a region of Auckland that is quickly becoming an area of interest. The Auckland Council Plan identifies West Auckland as a major source of future development and population growth," says Hargreaves.
Kelston Shopping Centre is within a 10 minute drive of Lynmall, which was recently purchased by Kiwi Income Property Trust for $174 million, and Westfield West City, valued at $188 million. Further north is Westgate Shopping Centre, which will become a part of a 56ha master planned Town Centre.
"Kelston is a smaller centre than some of those in the surrounding regional centres, so investors and retailers have the benefit of services, amenities and infrastructural updates without the same high costs. This also gives tenants the ability to pay rents at a discount to the major regional centres."
The shopping centre is surrounded by residential suburbs, with an estimated 54,000 residents.
"However, the anticipated growth of this area over the next two decades is quite remarkable," Hargreaves says.
A demographic study undertaken by Jones Lang LaSalle's in-house demographer Angela Webster predicts that the resident population within the Kelston Shopping Centre's catchment area will grow by 9 per cent between 2011 and 2021 and a further 8 per cent to 2031. Retail related expenditure across the catchment is put at $8.9 million, which is projected to increase to $9.6 million by 2021 and to $10.4 million by 2031.
"A significant portion of this expenditure is expected to be focused on food retail, which bodes well for the Kelston Shopping Centre where a large proportion of the sales turnover comprises food retail," he says.
