The arcade is well positioned at 183 Karangahape Rd, a bustling and vibrant part of Auckland City. Photo / Supplied
One of Auckland's best known retail arcades, the 90-year old St Kevins Arcade on K Rd, is for sale after a major facelift last year.
A fully occupied 2431sq m three-level mixed use complex, 183 Karangahape Rd is positioned between the tranquility of Myers Park and the hustle and bustle of colourful K Rd. Tenders will close June 14, unless sold earlier.
It is being marketed by Alan Haydock and Damien Bullick of Bayleys Auckland City & Fringe division
"St Kevin's Arcade has long been recognised as the jewel in the crown of the K Rd retail precinct and that remains the case today with the major refurbishment undertaken last year by current owner, The Icon Group, injecting new life into the property," says Haydock.
"The tasteful renovation has retained and enhanced the integrity of the arcade and its eclectic tenancy mix, while lightening and brightening the place up.
"It has certainly met with a very positive response from Aucklanders and as a consequence from tenants as well. The property is now fully leased to over 30 occupants who will provide the next owner with total net annual rental income of approximately $1.168m a year."
The Icon Group's Paul Reid says the decision to sell fits with the company's commercial add value business model.
"We would love to retain the building, however, we are selling to recycle funds into our next add-value project.
"We're very proud of what we've achieved with the refurbishment. We've spent considerable funds restoring the arcade and carefully choosing quality tenants while still retaining its point of difference and character. We have also de-risked and stabilised the asset for the next owner and believe it will deliver superior long-term capital growth."
The refurbishment and restoration included a full interior and exterior repaint and retiling, new roofing and the reinstatement of historical corbels and leadlight glass as well as the installation of modern building services and technology such as new fibre cabling.
The first floor offices and amenities and four residential units were also significantly upgraded.
The refurbishment has been recognised by the property's selection as a finalist in this year's Hawkins Heritage and Adaptive Reuses category of the Property Council NZ, Rider Levett Bucknall Property Industry Awards.
The arcade now has a total of 21 ground floor and basement retail and food and beverage tenants, six upper level commercial suites, which include a recording studio, four residential apartments and four storage and car park units.
"There is a good mix of retail, hospitality, commercial and residential tenants with a weighted average lease term of about 3.5 years and a wide range of expiry dates," says Haydock. "Many of the leases have fixed annual rental increases which will provide the next owner with steady rental growth in the years ahead."
The ground floor comprises mostly smaller boutique tenancies ranging from an 8sq m watch repair store to the 60sq m Gemmayze St Lebanese restaurant.
Two larger tenancies, the 324sq m Whammy Bar and 166sq m Wine Cellar - both on leases running to 2025-2026 - are located in the basement. The commercial suites range from 22sq m to 135sq m and the apartments from 84 sq m to 136sq m.
Damien Bullick says the property is in a dominant central position on K Rd, between Queen St and Pitt St, and benefits from 22 metres of high profile frontage to the busy road. Its elevated position directly overlooking Myers Park also provides panoramic vistas of the CBD skyline from the rear part of the arcade.
Retailers benefit not only from a high level of foot traffic along K Rd - over 11,000 daily - but also from pedestrians walking through the property itself to and from Myers Park which provides a popular connection with the CBD, says Bullick.
"The arcade should also benefit from the opening of the nearby City Rail Link Karangahape Road station, scheduled for 2023, which will significantly increase the amount of pedestrian traffic in this location."
Bullick says one of the key investment fundamentals of the property is the significant 1250sq m underlying freehold land holding which links K Rd to Myers Park and Poynton Terrace at the rear.
"This substantial land holding, combined with the favourable City Centre Zoning under the new unitary plan provides purchasers with options to add further value to the property in the future," he says.
The property has a rich history dating back to 1845, when a Regency style house and garden was built on the site for Jewish merchant David Nathan.
It was subsequently used as Government House in Auckland by Sir George Grey and during the New Zealand Wars, 1857-65, by General Sir Duncan Cameron, Commander of the British Forces.
Later when used as the officers' mess of the Royal Irish Regiment, it became known as St Kevens and it retained that name after it re-entered the possession of the Nathan family in the 1880s.
The site was bequeathed to Auckland city by the Nathans in the early 1920s and three buildings including St. Kevins Arcade were constructed on land the house and its winding gardens and tennis courts formerly occupied.
The arcade was built in 1924 and extended in 1926. K Rd was Auckland's premier shopping destination, often compared to Oxford St in London, for many years and St Kevin's Arcade was home to the best of Auckland's tailors and dressmakers, tea rooms and photography studios.
Looking to the future, Reid says St Kevins Arcade is well set to grow in coming years: "Younger and more upwardly mobile consumers continue to eschew mainstream malls in favour of authentic boutique brands and experiences.
"Millennials continue to reside close to hip and fashionable inner city artistic suburbs and St Kevins arcade is perfectly positioned to capitalise on this growing demographic."