An extensively refurbished, seismically-upgraded and fully leased Parnell office building with an excellent spread of 13 tenancies on trendy Parnell Road is up for sale.
The five level building at 86 Parnell Road is being marketed for sale by Henry Thompson of Ray White Commercial via tenders closing on June 18.
Thompson says the stand alone building comprises 1821 square metres of net lettable area across two ground floor retail tenancies with four levels of office above. It also has six on-site parking spaces located at the front of the property facing Parnell Road.
The building sits on a 556 square metre site and is fully leased and earning a net annual rental income of $643,456 from the 13 individual tenancies with a weighted averaged lease term (WALT) of 2.05 years.
Thompson says 86 Parnell Road benefits from a diversified income stream with no single tenant accounting for more than a quarter of the total income.
Tenants include the Sushi Japanese takeout bar on the ground floor, with well-known valuation company Darroch and international cruise line company Royal Caribbean upstairs among other office tenants.
"The balance of tenants is made up of financial services, legal firms, IT specialists and a quantity survey firm," Thompson says.
"The building occupies a very high profile site near the junction of Parnell Rise and Parnell Road and with an 18 metre road frontage. This has made it easy to attract tenants, especially with it being fully refurbished."
He says the property has the added bonus of being held in seven contiguous freehold unit titles with each office floor allocated a single title and each of the two ground floor retail tenancies on a single title. A separate unit title has also been assigned to a service room on Level 5.
The refurbished, seismically-upgraded and fully leased Parnell office building at 86 Parnell Rd, Parnell.
"This gives it a very flexible future if at some stage the new owner wanted to sell floors off individually. In the meantime, the property is generating a very good income and is ideal as a passive property investment with little left to do but maintain it," he says.
"Standalone investment properties of this calibre seldom become available on Parnell Road. With Auckland facing a shortage of office space, low vacancy rates and limited supply, the fundamentals exist for rental growth over the medium term. Additionally, with the Reserve Bank indicating an interest rate cut later this year and investors chasing a finite level of investment stock, we are likely to see further yield compression in the near term."
He says the vendor spent a considerable amount on bringing the building up to its 100 per cent A-grade Initial Evaluation Procedure (IEP) seismic rating which was completed in the last six months. The refurbishment was completed in 2008 and commenced with the building being stripped back to a concrete shell.
The renovations included new front and rear windows, new lighting and suspended ceilings on each floor and fire-rated gib-board installed between each level to allow for the floors to be unit titled. Lift fire curtains are on each level and new plumbing, wiring, data cabling and patch panels are on all levels.
Thompson says new kitchens and bathrooms are on each floor, along with new carpet, marble tiling and air-conditioning.
Both the exterior and interior have been freshly painted and there is a new electric roller security grills in Retail Unit B.
The refurbishment also included a new lobby with marble flooring, panelling and a chandelier.New staircases and stair carpet on every level as determined by seismic upgrade requirements. The floors are configured around the side lift core which contains one lift and two separate stairwells with access from the main lift lobby on the ground floor.
"The high level and extent of the work undertaken by the vendor requires minimal future capital expenditure," Thompson says.
He says Parnell is undergoing something of a renaissance with a new wave of new retail, office and hospitality developments underway.
"It is still very much one of Auckland's most sought after and tightly held retail and office precincts which today is home of design, media and IT companies, top end fashion outlets, and some of the city's most well-known cafes, restaurants and bars."
He says the earthworks for a new Parnell train station began in April this year with completion earmarked for August 2015.
"The station will be located just 500 metres south of 86 Parnell Road, and the predictions are that this station will become one of the city's busiest with 2000 passengers set to disembark in the peak hours of between 7 am to 9 am every business day.
"In addition to the regular bus service running along Parnell Road, this new train station will generate further demand for local retail and will provide a viable transport alternative for office workers commuting to and from Parnell."
What's on offer?
The property: Five level office building.
Location: 86 Parnell Rd, Parnell.
Agency: Ray White Commercial.
Sales method: Tenders closing on June 18.
Spread of 13 tenancies.
Earns net annual rent of $643,456.
Recently extensively refurbished.
A-grade seismic rating.
Close to planned Parnell rail station.