Large Penrose site offers many add-value options

A warehouse and office complex with showroom for sale at 531 Great South Rd, Penrose. Photo / Supplied

A multi-tenanted warehouse and office complex with showroom, at 531 Great South Rd in Penrose, is being marketed for sale as a chance to secure a passive, add-value or owner-occupier asset with significant exposure, diversified income streams and plenty of future add-value options.

"The property encompasses a total of seven units comprising a total area of 3765.7sq m and generating annual rent of $391,355," says Sam Smith of Jones Lang LaSalle, who is selling the property with colleague Ben Pilley. They have sole agency for the sale with expressions of interest sought by September 7.

Smith says six of the units have a weighted average lease term (Walt) of 4.1 years and the seventh unit, with an area of 526.7sq m, is vacant. "An immediate value uplift can be driven by leasing the vacant premises," says Smith.

The seven units range in size from 167.2sq m to 992sq m and the property is only 8km from the Auckland CBD, near the Ellerslie-Panmure Highway, with egress and ingress providing easy access to State Highway 1. It also benefits from dual access with the property boundary running from Great South Rd to Walls Rd.

"About 15,000 cars pass daily along Great South Rd, and with 100m of road frontage the property is highly visible and well known in the established Penrose precinct," Smith says. "This offering is likely to particularly appeal to owner-occupiers with the ability to secure larger premises with diversified cash flow, especially those wanting to move to their own premises to avoid the expected increase in rents as market conditions improve.

"The premises were built in the 1980s and a redevelopment of the property to extract further value is certainly a viable option for an investor that is able to inject capital for redevelopment purposes."

The total land size of the property is 6454sq m with 59 carparks. Dual access from Great South Rd and Walls Rd would enable developers to consider a complete redevelopment.

"In the past other premises in the area were split into multiple offerings through unit titling, which may be a possible option for investors," Smith says. "Investors should investigate the option of unit titling the seven units and selling the premises individually. This is likely to prove a popular investment option for purchasers looking for smaller quantum lot sizes, with steady rental income.

"An example of this possibility is Q-Rabbit, a childcare facility, with a total 992.7sq m which has a lease expiry in 2021."

The latest Jones Lang LaSalle research shows Auckland's combined industrial warehouse and office rents increased by 2.5 per cent over the last year, with further increases expected over the next year.

"An increase in owner-occupiers looking to purchase has definitely risen over the last six months due to the perception that business conditions are improving," says Smith. "Many want to make their own decisions about their future payments, and occupying their own premises makes them the master of their own future."

Pilley says the high-profile building in Penrose provides many key characteristics that investors require.

"The global financial crisis has highlighted to many investors the necessity of steady cash flow in order to insulate from asset-value declines," says Pilley.

"However, many passive investors have also come to appreciate assets that have future additional potential.

"A passive investment with diversity can become an add-value investment as required and is an especially valuable factor when the market conditions become more buoyant. "The strong fundamentals of the property at 531 Great South Rd lie in the security, versatility and visibility of the property. Savvy investors and owner-occupiers alike will recognise the opportunity this solid investment opportunity provides."