Some of the units in the block are rented at below market value.
A fully leased mixed-use building on a high-profile site at the gateway to the Link Drive bulk retail precinct in the Wairau Valley is being marketed as an add-value opportunity for investors.
The 1680sq m building on a 2899sq m freehold site at 171-181 Target Rd is being marketed by John Algie of Bayleys Auckland and Ranjan Unka, Bayleys North Shore Commercial and is among 25 properties that will go under the hammer in a portfolio auction on September 10.
Constructed in the early 1970s but recently upgraded, the building has showroom and warehouse space on the ground floor with first-floor offices above. Algie says the property is producing net annual rental income of $187,775 from seven tenancies but has rental upside potential.
"The rental being paid by a number of tenants is below current market rates, particularly from the office space. Six smaller tenancies are on relatively short-term leases so there would be an opportunity for a new owner to increase the property's return when these leases come up for renewal or are expiring."
The front part of the building has two showroom tenancies on the ground level, with separate first-floor offices accessed from a common ground-level foyer. The rear of the building has substantial showroom space at ground level along with warehousing. It also has first-floor offices, partly used in conjunction with the ground-level tenancy.
This part of the building is occupied by a Bedstop store, which leases 1286sq m and 13 car parks and generates close to 70 per cent of the property's income. It has a six-year lease until mid-2019 with one six-year right of renewal.
Six smaller tenants occupy retail and office space of between 22sq m and 103sq m. They are accounting firm Gary Morrison Ltd; payroll outsourcing service provider The Paymaster Ltd; computer services company PC House NZ Ltd; a business consultancy, a property services company and a security company.
Unka says the property has also generated interest from developers because of its excellent exposure to the high volume of traffic that passes along Target Rd to Link Drive or towards Wairau Rd and the Tristram Ave State Highway One motorway interchange, which is less than a kilometre away. The site has been excavated to near level, with substantial Tanapole retaining walls on the southern and western boundaries.
"Surrounding properties have also mostly been developed during the early to mid-1970s as was much of Wairau Valley," says Unka. "They are mostly industrial-type buildings that have been increasingly upgraded, or the sites redeveloped, to provide bulk retail or other semi-commercial premises. This is now a well-established bulk-retail location with a good range of occupiers that mostly provide homeware products."
The property is next to Furniture City, with Rebel Sports, North Shore Toyota and Mitsubishi Motors on the other side of the road. It is also adjacent to the traffic light controlled intersection with Link Drive, which increases its exposure for tenants.
"Because of its strong location, the property has had a high occupancy over the years and, with vacancy rates in the area at a low level at present, this is likely to continue," says Unka.
The zoning is Business 9, which permits a wide range of employment-generating business activities with a maximum height restriction for buildings of 9-12m.