A 580sq m Auckland character building on K Rd, close to a future City Rail Link (CRL) station, is for sale with a new lease to its longstanding tenant.
Located on a 304sq m site at 270 Karangahape Rd, the property provides three levels of commercial accommodation, including a basement.
It is occupied by the Family Bar and Club which has recently renewed its lease for six years from December 2018, with one four-year right of renewal.
The freehold property, generating net annual rent of $210,600, is for sale by tender closing at 4pm on Tuesday March 5, unless sold prior. It is being marketed by Bayleys Auckland City & Fringe manager Alan Haydock and senior broker Damien Bullick.
Haydock says the offering is among 20 properties in central Auckland and surrounding CBD fringe suburbs featured in Bayleys' first Total Property portfolio for 2019.
"This is the largest volume of listings we have had in a Total Property portfolio this early in the year and reflects a changing commercial property market," says Haydock. "It has become more challenging for purchasers to secure bank funding and as a consequence the buyers who do have higher equity levels are often more experienced and have a more hard-nosed approach to price.
"This has resulted in a big drop in off-market sales and vendors are realising if they want to get a good result then they need to wrap an effective marketing campaign around their properties."
Damien Bullick says the Family Bar has occupied 270 Karangahape Rd since 2006 and is one of K Rd's best known nightclubs, with a high profile amongst the LGBT community in particular. The tenant also operates a gaming lounge at the front of the property, in addition to a bar at the neighbouring property at 278 Karangahape Rd.
"The building presents well and is among a block of character buildings with attractive and well maintained facades. The current owner had a detailed structural assessment (DSA) of the building undertaken last year which showed it has a seismic rating of 50 per cent of New Building Standard (NBS) - above Auckland Council's minimum requirement of 33 per cent of NBS."
With a new lease in place, Bullick says the property should appeal to investors looking for cashflow.
It is well positioned in the heart of the thriving K Rd entertainment and retail precinct.
To the rear of the property is a laneway off Mercury Lane which will border the entranceway to the K Rd CRL station. This laneway currently provides service access to the rear of 270 Karangahape Rd and is shared with owners of other neighbouring buildings.
"There is no doubt that the advent of the new station will further enhance the rejuvenation and intensification of activities in this part of K Rd which will benefit surrounding property owners. In anticipation of this, we are already seeing a jockeying for position and a significant increase in investment activity in this location."
Late last year, Haydock and Cameron Melhuish sold the nearby two-level 1288sq m former Newton Post Office building at 292-300 Karangahape Rd for $6.05 million. The building, partially leased to two tenants and generating net annual income of $136,000, will be a short walk away from the new station.
The completion of the CRL will undoubtedly add to the longer-term development potential of 270 Karangahape Rd, Haydock says.
The site's City Centre zone permits a wide range of activities including offices, retail, residential, commercial services, entertainment facilities, visitor accommodation and boarding houses. There is a maximum height allowance for the location of about 26.5 metres (allowing for viewshaft protection).
The completion of the CRL will undoubtedly add to longer-term development potential, Haydock says.
"Just as the tram once transformed K Rd into a sophisticated shopping and entertainment district, the advent of the CRL will have a huge impact on this location," says Haydock.
"It will speed up the transformation of what has been a 'red light district' into one of the central Auckland's most vibrant commercial, retail and residential hubs.The new CRL station is set to become the catalyst for K Road's next regeneration with most of the surrounding area zoned for more intensive use."
The planned Karangahape station will cater for an anticipated 6,000 commuters at peak times, making K Rd a desirable inner city location for businesses, workers and residents alike. It will take only three-minutes to get from Mt Eden station to Karangahape, three-minutes from there to Aotea Station and another three-minutes to Britomart.