Land banking with good income

The Northcote property is well located and could be more intensively developed.

A large site occupied by three office buildings on the corner of two busy North Shore roads is up for sale offering a new owner longer term redevelopment opportunity.

The property, encompassing 2494 sq m of land at the intersection of Lake Rd, Ocean View Rd and Northcote Rd, is being marketed by Simon Aldridge and Stevie-Lee Dawson of Bayleys North Shore Commercial. It will go under the hammer as part of Bayleys' latest Greater Auckland portfolio auction on March 5.

Aldridge says the property is in a great location and could be more intensively developed - particularly under its proposed zoning in the Auckland Unitary Plan which is likely to come into force within the next three to five years. "In the meantime, it offers a substantial land banking opportunity with a good holding income of about $174,000 from the three fully leased buildings."

The property, at 218-224 Lake Road, Northcote, has dual street frontage and access to both Lake Rd and Ocean View Rd. Lake Road is a major feeder arterial route to and from the Northcote Rd and Onewa Rd connections to the Harbour Bridge while Ocean View Rd runs from Northcote Rd onto Pupuke Rd and is a popular route for traffic heading to Birkenhead, Glenfield and other surrounding North Shore suburbs. Dawson says it is close to the motorway making it a 10 minute journey into Auckland's CBD in non peak hour traffic and it's also very handy to Takapuna's CBD and beach.

Each separate office building is fully self contained with shared use of common areas by tenants. "The residential styled dwellings were constructed in the 1980s in a mix of brick veneer, weatherboards and timber framing, with tiled roofing, and have been well maintained since," Dawson says. "The buildings are set in landscaped grounds and are surrounded by well established, mature trees, with off street parking and a bus stop right outside."

The largest occupier is New Holland Publishers NZ, one of the leading publishers and importers of non-fiction in New Zealand, which been the anchor tenant of 413 sq m Building One, fronting Lake Rd, since the company's establishment in 1998. The firm currently occupies 315 sq m on a lease producing net annual rental income of $59,377 with two smaller tenancies to Hire-A-Maid and Award Homes. The main tenant in 202 sq m Building Two is the Accident Compensation Corporation, with smaller amounts of space occupied by David Cook Consultants Ltd and Hornby Architects. The 281 sq m Building Three is shared between property valuation company Telfer Young Auckland and lawn mowing franchise business Crewcut.

"The property offers a pleasant working environment and has been well leased over the years with a mix of national and local tenants," says Aldridge. "The leases are short term, which provides flexibility for a new owner, but a number of tenants have expressed an interest in making a longer term commitment particularly now that the business environment is picking up again."

The property is currently zoned Residential 7: Office Residential under the Auckland Council District Plan Operative North Shore Section 2002 plan. This allows small scale business activity that provides a buffer between residential and business areas. Aldridge says that under this zoning, development controls allow for a density of one unit per 200 sq m and a maximum height of eight metres. The permitted intensity of development allowed will increase under the proposed Auckland Unitary Plan with the site zoned Residential Mixed Housing Urban. On its website, Auckland Council says this zone provides for housing in a variety of sizes and forms, including detached dwellings, terrace housing and low-rise apartments "that will increase the supply of housing, create diverse neighbourhoods and provide housing choice".

"Through the resource consent process, four or more dwellings at a higher density may be built on large sites with wide road frontages," the council says. "This is because larger sites are capable of accommodating a wider range of housing types, integrating development into the neighbourhood and achieving high quality on-site amenity"

Aldridge says the Mixed Housing Urban zone allows for more density and more relaxed development controls in comparison to the Mixed Housing Suburban zone with a maximum height of 10 metres and building coverage of 40 to 50 per cent.

"Given this property's substantial land area there will be a lot of opportunities for development on this site once the unitary plan becomes operative," says Aldridge. "However, this property offers many different options that will appeal to all sectors of the market."

www.bayleys.co.nz/376600