A Grafton property undergoing an extensive refurbishment is being offered for sale with a new eight year lease to a strong, established tenant.

On completion next month the two-level building at 164-174 Khyber Pass Rd will serve as the headquarters for The New Zealand Coffee Company which was established in 2001 and has since acquired the Sierra Café brand.

Shoneet Chand and Kris Ongley of Colliers International are marketing it for auction at 11 am on Wednesday, October 7, unless it sells beforehand by negotiation.

The building has a total net lettable area of 609 sq m and occupies a 668 sq m freehold, corner site.


The total renovation includes architecturally designed exterior and interior fit outs and a significant structural upgrade resulting in an A-grade seismic rating.

The 297 sq m ground floor plus 28 sq m landscaped courtyard will house a café, coffee machine showroom, coffee bean roastery, and workshop. The 284 sq m first level will be administration based with offices, meeting rooms, small workshop, and storage.

The site, which sits on the intersection of Khyber Pass Road and Edward Wayte Place, also comes with 13 car parks in total - nine open and four covered.

"Newly refurbished buildings with long leases to single tenants are a very rare to find in the Auckland city fringe market," Chand says.

Shoneet Chand of Colliers.
Shoneet Chand of Colliers.

"The extent of the refurbishment means this is essentially a new building - almost everything but the four walls has been ripped out and rebuilt from scratch. The vendors have spared no expense with the overhaul which is due for completion in early October."

A head lease over the premises will earn net annual rent of $261,000 plus GST including from a large billboard facing Khyber Pass Rd which has been there for more than 35 years.

The initial eight year lease term will commence on October 1 and is supported by two further rights of renewal of four years each giving a potential final lease expiry of September 30, 2031.

Chand says built-in rental growth through fixed 3 per cent increases every two years and a market review on renewal will add to the appeal of an already attractive investment offering.


"This is an ultimate 'hands off' investment opportunity for owners who will benefit from a solid cash flow, the strong tenant, and a very low maintenance building," he says.

The New Zealand Coffee Company is fully integrated in the coffee industry providing a wide range of products and services throughout New Zealand that includes 35 franchise cafés nationwide under the Sierra Café brand. The company has expanded to now conduct business in almost every facet of the coffee industry with involvement in bean roasting and coffee machine sales, leasing and distribution.

Sierra sits under the ownership umbrella of United Franchise Systems, the parent company of a network of franchise brands that include Palmers Garden World and Valentines restaurants.

Chand says the strength of this tenant covenant povides confidence to investors seeking a solid passive investment.

Kris Ongley of Colliers.
Kris Ongley of Colliers.

Ongley says the Khyber Pass Rd and Grafton areas have been transformed recently through a period of property rejuvenation and council-led infrastructure improvements as well as new commercial and residential developments.

"These developments include Auckland University's substantial redevelopment of the former Lion Brewery site on Khyber Pass Road and multiple, new residential projects like Hypatia Apartments at 246 Khyber Pass Rd, The James Apartments at 371 Khyber Pass Rd and Skhy Apartments at the intersection of Khyber Pass Rd and Symonds Str.

"This development activity is changing Khyber Pass Road from an urban arterial to an upmarket commercial and residential hub."

Grafton is positioned between Newmarket and Mount Eden shopping precincts with immediate motorway access only one hundred metres away, and nearby public transport links such as the new Grafton train station just down the road.

The location is a short drive from Auckland's central business district and local amenities include a new Les Mills' gym and Auckland Hospital.