A multi-tenanted commercial property with frontage to three streets in Takapuna's CBD is for sale offering immediate substantial rental cashflow and future development potential.
The 1672sq m two-level building on an 817sq m corner site at 8-12 The Promenade is among more than 20 commercial and industrial properties that will go under the hammer at Bayleys' first Auckland Total Property portfolio auction for 2018 on March 7, unless sold prior earlier.
It is being marketed by Brian Caldwell of Bayleys North Shore Commercial.
The property is now home to 10 commercial businesses which are generating net annual rent of $415,091.
"This is an opportunity to purchase a sizeable landholding in a prime central Takapuna location which will provide a significant cashflow over the next few years, with investment risk spread across a diverse range of tenants," says Caldwell.
"Longer term, the site has considerable development upside potential under its new Unitary Plan Business Metropolitan Centre zoning which has been applied to areas identified for growth and intensification."
The high-profile property has exposure to three busy Takapuna central streets, with its main frontage being to The Promenade leading to Takapuna Beach. It also has tenancies facing onto Hurstmere Rd and Killarney St, two main roads running through Takapuna.
"The property's tenants benefit from excellent exposure to passing traffic along Takapuna's golden restaurant mile," says Caldwell.
"It is rare for properties to come to the market that are so well located and tenanted, with the potential for future development also.
"Longer term, it could suit a mix of commercial activities on the lower levels similar to what is there at the moment with residential above or a full residential redevelopment might also be possible at some stage.
"It's in an ideal area for residential development as evidenced by the number of multi-level residential buildings nearby.
"It is close to the retail, food and beverage and entertainment offerings of central Takapuna and is only a short stroll from Takapuna Beach and Lake Pupuke. It's also opposite the Bruce Mason theatre.
"The upper levels of a residential development would benefit from commanding lake, beach and Hauraki Gulf views and plenty of natural light, given the site's twin corner position."
Caldwell says the site is in a pivotal position on an elevated triangular block of land bordered by Hurstmere Rd, Killarney St and The Promenade.
Last year he sold a similar, smaller nearby property at the apex of this block at 178 Hurstmere Rd, with frontage also to Killarney St, for $6.8m at a 3.9 per cent yield on its four tenancies. It has a two-level 995sq m building on a 567sq m site, with the same Metropolitan Centre zoning.
Caldwell says the whole block could provide a developer with flair and vision with the opportunity to unlock the full potential of the location. In the meantime, he says 8-12 The Promenade offers a good mix of well-established tenancies and the potential to increase the property's rental income.
The largest tenant is the Aroy Dee Thai restaurant which has a 292sq m ground floor tenancy with substantial frontage to The Promenade.
It has been in occupation since 2003 and has exercised the second of four four-year rights of renewal.
Another long-standing restaurant tenant, GPK, occupies 195 sq m in a prime position on the corner of Hurstmere Rd and The Promenade. It has been there for 10 years.
On the other corner of the property, where The Promenade intersects with Killarney St, the Vision Personal Training gymnasium occupies 240sq m on a five-year lease from 2014 with two five-year rights of renewal.
The Takapuna gymnasium beat off many big name competitors to win the supreme award at the 2015 New Zealand Exercise Industry Awards after taking out the small exercise facility of the year category for gyms with fewer than 500 members.
Vision Personal Training is an Australian brand which started in Sydney in 2001 and now has over 50 gyms including another one in Ponsonby. The Takapuna gym has seven personal trainers who work one-on-one with clients.
There are range of office tenancies on the upper level with the largest of these being alphaXRT, which specialises in the sales and servicing of software and equipment used in the treatment of cancer. It has exercised the second of three two-year rights of renewal over 132sq m of space.
The 10 leases have final expiries ranging from 2018-2028 and all but two have demolition clauses.
There are 23 open-air carparks on top of the building, accessed via a ramp off KiIlarney St, with six of these not allocated to tenants.
Caldwell says it would be possible to increase the property's rental income by leasing these six car parks along with 373sq m of empty office space on the top floor of the building. He says a recent rental assessment has put the potential annual net rental income of the property if this space was tenanted and all existing tenancies were leased at current market rentals of $516,738.