Duo both favoured by established history and position

One property is in this retail block on Sandringham Rd which links some of Auckland's busiest suburbs and is close to Eden Park. Photo / Supplied

With entry-level commercial properties few and far between, the auctioning of a Sandringham retail and residential building and an older industrial site in Manukau are expected to attract investors looking to make an initial foray into the commercial property market.

Up for auction is a freehold 118sq m property at 165 Sandringham Rd, in the city suburb of Sandringham, that sits in a strip of shops and has a ground-level liquor store and an upper-level two-bedroom apartment split over two floors.

The second property facing the hammer as a mortgagee sale is a 2500sq m Manukau property at 33 Grayson Ave that is used for a car wrecking business.

CBRE sales broker Jillaine Murray, who is marketing the Sandringham Rd property with colleague Colin Stewart, says the 1920s-built property is the ideal investment for a first-time commercial buyer as it returns a total of $32,185 a year and will fall within the sub-$700,000 price range.

Murray says the liquor store is tenanted under a commercial lease that has rent set at just over $15,000 a year in rent, while the apartment operates under a standard residential lease and returns just over $17,000 a year.

"This is a home and income opportunity that will suit a myriad of investors searching for the opportunity to get into the commercial property market," she says

Stewart says the property is "easy to understand" with two-yearly rent reviews and the liquor store's lease will run until 2018 if all the rights of renewal are exercised.

The property, which will be auctioned on May 11, sits on the western side of Sandringham Rd, 350m from Eden Park, in a strip of nine shops with good road frontage and exposure.

Murray says the building's ground floor fit out is basic but serviceable, while the apartment has a modernised bathroom, kitchen and living area plus a small outdoor deck and sunroom.

Under the Auckland City Council's District Plan, the property has a zoning of Business 1. This zoning allows small scale and local business within residential areas to satisfy local retail and service needs.

Sandringham is one of Auckland's older suburbs. The first buildings were constructed in the suburb about 1915 followed by rapid development in the 1920s and many of them remain. Sandringham Rd is a major city fringe arterial route linking the southern suburbs of Mt Roskill and Sandringham with Morningside, Kingsland, Eden Terrace and Auckland CBD.

"This is an area that has a lot of potential to become the next Kingsland or small-scale Mt Eden village, particularly as it is close to Eden Park and the property will become a prime target for reinvention," Murray says.

Also for auction on May 11 via mortgagee sale, is a 2500sq m site at 33 Grayson Ave, Manukau, that comprises an older building behind a security fence. The building has a gable pitch, a 5m stud rising to 7m and substantial yard area.

"The tenant's car wrecking business is probably appropriate for the age and condition of the building which would best be described as dated," says Derek Harries, CBRE's South Auckland senior director, who is marketing the property. Harries says it will be "an outstanding redevelopment opportunity" at the end of the lease.

The business signed a two-year lease with four two-year rights of renewal in April 2008 at rent of $90,000 a year and operating expenses. "The lease finally expires in 2018 if all rights of renewal are exercised," says Harries. "The property would then be overdue for redevelopment."

Harries says the site sits in the middle of a rejuvenating industrial area that has history, a sense of place and the expanse to develop.

Grayson Ave was one of the first areas in South Auckland to attract industrial tenants and Harries says a number of properties in the street are in the throes of redevelopment.

Grayson Ave is off Cavendish Drive and is in South Auckland's industrial heartland. "There are a number of significant properties here with institutional owners, including Goodman, Property for Industry, Southpark Group, Chalmers Properties and ING," Harries says.