Aerial view of a two level building for sale on a large site at 470 Beach Rd, Murrays Bay.
Two prime North Shore coastal properties occupied by retail tenants in Browns Bay and Murrays Bay will go under the hammer later this month as part of Bayleys' Total Property portfolio auction.
The first offering is a retail and office building at 8-12 Clyde Rd, Browns Bay, which is up for sale for the first time since it was built in 1979. Located on a 746 sq m site on the corner of Clyde Rd and Anzac Rd, the two level 1100 sq m building is fully leased with six tenancies paying total net annual rent of $267,639. It is being marketed by Ranjan Unka and Brian Caldwell of Bayleys North Shore Commercial and will be auctioned in Bayleys' central Auckland auction rooms on August 12.
Whitcoulls and Harcourts Cooper & Co are on the ground floor, while office occupants on the upper floor comprise legal firm Young & Caulfield, KIP McGrath, In Touch Ministries and a training and development facility for Subway International staff.
"The building has had a very stable tenancy history with Whitcoulls and Young & Caulfield having been there since the building was developed while Cooper & Co, which operates 11 Harcourts offices on the North Shore and Waiheke Island, is another longstanding tenant that has recently invested a considerable amount in updating its fit out."
Unka says the property is located one block back from the beach in the heart of Browns Bay which is a popular area for retail businesses and apartment living.
"Commercial premises in the busy town centres of coastal suburbs like Browns Bay tend to be very tightly held which is reflected in the fact that the vendor which developed the property has owned it for 36 years," says Unka.
Caldwell says the property is strategically positioned on a prime corner roundabout intersection with a recently refurbished Countdown and a new strip retail development located across the road while to the rear is a just completed New World supermarket whose car park adjoins 8-12 Clyde Rd.
"The property is superbly located in the 'happening' part of the town centre where tenants have huge exposure to high traffic flows and benefit from being surrounded by two major supermarkets, banks and a wide range of shops, restaurants and cafes."
The property currently has a Business 2 zoning which seeks to manage the effects of buildings and activities in suburban centres and has a Town Centre zoning under the Proposed Auckland Unitary Plan (PAUP). The Town Centre zoning typically allows building heights of between four and eight storeys to facilitate increased office and residential living opportunities on the upper floors.
"Purchasers would need to undertake their own engineering and planning feasibility studies but indications are that there would be an opportunity to build further floors under the new unitary plan," says Caldwell.
Two bays further south, is a smaller 480 sq m two level building, with restaurant and café tenants overlooking Murrays Bay, that will also go up for auction on August 12.
Occupying a larger 1236 sq m site at 470 Beach Rd, Murrays Bay, it is being marketed by Damian Stephen of Bayleys North Shore Commercial in conjunction with Tony Chaudhary of Bayleys South Auckland.
"The property is ideally situated on an elevated corner site directly opposite the Murrays Bay Beach foreshore, providing sweeping views across a public car park to the beach and out to the Hauraki Gulf," says Stephen. "It also has high visibility to the large volume of vehicles travelling along Beach Road to and from the waterfront or which park in the council car park in front of the building."
Chaudhary says the property's waterfront location has attracted three food related tenancies. The largest is the African themed Serengeti restaurant which occupies the 266 sq m top floor, giving diners wide ranging sea views. A second restaurant is part of the Raviz Indian restaurant group and the Jacaranda Cafe with a substantial outdoor seating area, occupies the ground floor. A total of 17 car parks around the building are included in the sale.
The three tenancies are currently earning net annual rental income of $149,200 with a fixed increase of $5,720 on one of the leases due in mid 2016.
"The three leases offer investors a spread of risk and also have a good range of renewal or expiry dates of 2017, 2019 and 2021," says Chaudhary. "Two of the leases have final expiry dates in mid 2021 and the other lease can be terminated with 12 months' notice from mid 2020.
This means they have been well set up for the next owner to occupy or redevelop the site in 2021 should they wish to do so."
The property's current zoning of Business Local 1 has a height limit of eight metres but this will increase to 12.5 metres under its new Neighbourhood Centre zoning in PAUP. This will allow buildings of up to three storeys with ground floor commercial space and residential dwellings on upper floors provided they are in keeping with the surrounding residential environment.
"There is certainly potential for a quality mixed use development on the site longer term given the strength of the location within a stone's throw of the beach," says Chaudhary. "In the meantime there is good steady income coming from the property which would help fund such a future project."