A large retail and office building is for sale on Barrys Point Rd, Takapuna in which retailer Kathmandu and building consultancy firm Prendos are long-term anchor tenants.
Located on 2014sq m of land at 34-36 Barrys Point Rd, the fully leased four-level building is generating net annual rent of $916,012 plus GST.
The property has a capital valuation of $11.45m but it's expected to sell for well in excess of this figure given its location in the heart of one of the North Shore's most sought after commercial precincts, says Matt Mimmack who is marketing it with Bayleys North Shore Commercial colleagues Adam Watton and Nick Howe-Smith.
One of the 'trophy' listings in Bayleys' latest Total Property portfolio, the building is for sale by tender closing at 4pm on Thursday June 28, unless it sells earlier.
Mimmack says the tenancy risk is spread across eight separate tenancies. NZX listed Kathmandu leases the bulk of the ground floor and has recently confirmed its occupation for a further eight years from August 2018 with one eight-year right of renewal.
"Location is key for large format retailers like Kathmandu and its willingness to commit to a lease as long as this is a vote of confidence for Barrys Point Rd," says Mimmack. "It's reconfirmation of Barrys Point Rd's transformation from a formerly predominantly industrial precinct into a thriving retail and commercial centre."
The Barrys Point Rd store is among over 160 shops Kathmandu has in New Zealand and Australia. For the six months to January 31, the company reported net profit of $12,227,000 - up 23 per cent on the same period last year, with sales up 4.3 per cent to $204.81m.
Office tenant Prendos occupies all of the 3556sq m building's first floor. It has an eight-year lease from January 2017 with two four-year rights of renewal
Prendos was established in 1988, initially as a property valuation and consultancy company by Greg O'Sullivan and Trevor Prendergast. It has subsequently become best known for its ground-breaking work with leaky building surveys and remedial designs for homeowners and body corporates.
The firm's services now encompass surveying, architecture, structural and fire engineering, valuations, disputes resolution, project management and, most recently, asbestos surveying and management services. Prendos also has offices in Whangarei, Tauranga, Rotorua, Wellington and Christchurch and describes itself as New Zealand's largest employer of building surveyors.
"The Barrys Point Rd premises is Prendos' New Zealand head office and the quality of its fit-out reflects that," says Watton.
He says Kathmandu has been in the building for over 12 years and Prendos for more than 16 years. Their leases generate about 64 per cent of the property's income and both have built in rent growth. Kathmandu's lease has annual increases based on the Consumer Price Index (CPI) plus one per cent while the Prendos lease has fixed annual rent increases of two per cent.
The building's upper two levels contain a mixture of smaller commercial tenancies and car parking while the Sheepskin Shop occupies the balance of the ground floor having exercised the first of two three-year rights of renewal last year.
The building has an A-grade earthquake rating, with a seismic assessment of 89 per cent of New Building Standard (NBS).
Watton says another attractive feature of the building is the abundant car parking for tenants and customers. There are over 50 basement car parking spaces with lift access to the retail tenancies and further bays in front of the two shops as well on the top two levels which are accessed via a ramp.
"All up there are over 100 parking spaces and I don't know of another building on Barrys Point Rd which has this many carparks apart from the Countdown supermarket up the road. This is well above the norm for a four-level building.
"Longer term, it might be possible to add further value to the property by converting some of the upper level parking, particularly on the rooftop, to offices or even residential accommodation given the Mixed-Use zoning," says Watton.
"Also, the property's rents are set at fairly conservative levels and there is upside in future from the fixed increases prescribed in the leases as well as potentially from market reviews."
The property is located half way down Barrys Point Rd, a main north/south thoroughfare with high traffic flows that links with the State Highway 1 motorway interchange and Esmonde Rd - with Anzac St and Taharoto Rd to the north.
Mimmack says Barrys Point Rd is popular because it's close to Takapuna's CBD and the beach and the Aorangi northern busway station which are all within comfortable walking distances.
He says the area's strong location is reflected in the firm yields achieved on the limited number of properties that come up for sale in the precinct.
Earlier this year, Mimmack and James Kidd of Bayleys North Shore Commercial sold a smaller fully-leased two-level building on a 1575sq m corner site at 55 Barrys Point Rd for $5,775,000 at a 4.95 per cent yield.