A six-level office and retail building with 22 tenants extending over two streets on a high-profile Parnell leasehold site is for sale for $4.6 million offering about twice the average yield for the area - and with opportunity to expand.

The property at 59-63 The Strand and 20 Augustus Terrace in Parnell has 53 car parks with resource consent to redevelop the car park with additional parking plus a further 100sq m for a cafe.

"Featured in Colliers' latest New Zealand Portfolio, this building is in an enviable location with multiple income streams," says Andrew Hiskens of Colliers International, who with colleague Mark Wyness is marketing it for sale by negotiation.

"It has dual street frontage, excellent car parking and scope to add value, creating a very attractive cash flow proposition," says Hiskens.


"While the land is leasehold, the rent is fixed for 21 years, and the price has been set so the buyer will realise a net yield of better than 12 per cent, after operating expenses and ground rent. That kind of return is very difficult to achieve anywhere in the world these days," he says.

"The rent on the land was set at $155,000, and it will be 21 years before it can be reviewed again."

Hiskens says total gross rental income on the property is more the $935,000. "Based on the sale price of $4.6 million, the gross yield is about 20 per cent, more than double the average in Parnell of 8-9 per cent."

The Business 5 zoned property covers land area of 1438sq m and net lettable area of 3435sq m. The office building is nearly fully leased with a broad mixture of more than 20 tenants and two of the smallest units currently vacant. Rental income is derived from the tenancies, two billboards and a Vodafone communication tower, and the car parks.

"The investment will work well for an investor who wants the job of managing the property to maintain its value," Hiskens says. "It is in a great location, attracting a good mix of tenants. However, the vendor is based overseas so has now decided to divest and is open to offers."

The six-level building has an A-grade seismic Initial Evaluation Procedure (IEP) rating. The ground floor is retail space leased to two automotive tenants, Europa Auto Service and Civic Automotive, which are accessed from The Strand.

The rest of the levels, comprising three floors of office suites and two levels of roof-top parking, is accessed from the other side of the building, Augustus Terrace, which is higher.

Civic Automotive is the largest tenant, occupying 612sq m until September 2015 with two three-year rights of renewal. Another large tenant is Sentient Software, occupying 419sq m, with the lease running until November 2016, also with two three-year rights of renewal. The other office tenants, including law firms, a construction company, a real estate office and various other professional services, are on varying lease terms.

Augustus Terrace opens to Parnell's shopping and cafe district a short walk away. Wyness says The Strand is a desirable business location as the major arterial route linking the Ports of Auckland and eastern suburbs to Auckland's extensive motorway systems.

"In addition to its easy access to the motorway there is plenty of parking for tenants and their staff. It is also within walking distance of several parks, boutiques, speciality retailers, cafes and restaurants," Wyness says.

"Because of its excellent location the property is nearly fully leased and it will only become more attractive to tenants as Parnell continues its rapid transformation from light industrial to the more intensive retail, residential and commercial office uses.

"For the staff and the tenants, it's very easy to access the building by car, with motorway ramps to the Northern, Northwestern, and Southern motorways within a block. Public transportation in the area is excellent and will soon to improve further, when Parnell's new railway station near Cheshire St is complete.

"This is due to open in late 2015, linking to Britomart in the CBD."