A substantial retail and office building on Barrys Point Rd, Takapuna is up for sale with retailer Kathmandu and building consultancy firm Prendos as its long term anchor tenants.
Located on 2014 sq m of land at 34-36 Barrys Point Rd, the fully leased four-level building is generating net annual rental income of $916,012pa + GST.
The property has a Capital Valuation of $11,450,000 but is expected to sell for well in excess of this given its location in the heart of one of the North Shore’s most sought after commercial precincts, says Matt Mimmack who is marketing the offering with Bayleys North Shore Commercial colleagues Adam Watton and Nick Howe-Smith.
One of the trophy listings in Bayleys’ latest Total Property portfolio, it is for sale by tender closing at 4pm, Thursday June 28, unless sold prior.
Mimmack says 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 in Barrys Point Rd,” says Mimmack. “It is 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 that Kathmandu has in New Zealand and Australia. For the six months to January 31, the company reported net profit of $12.227 million, up 23 per cent on the same period last year, with sales up 4.3 per cent to $204.81 million.
Office tenant Prendos occupies all of the 3556 sq 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.
Its services now encompass surveying, architecture, structural and fire engineering, valuations, disputes resolution, project management and, most recently, asbestos surveying and management services. It 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 fit out reflects that,” says Adam Watton.
He says Kathmandu has been in the building for over 12 years and Prendos has been there for more than 16 years. Their leases generate approximately 64 per cent of the property’s income and both have built in rental 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 rental 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.
Watton says another attractive feature of the offering is the building’s abundant car parking for tenants and their customers. There are over 50 basement car parking spaces with lift access to the retail tenancies and further parks 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 would have this many parks 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 roof top to office or even residential accommodation given the Mixed Use zoning,” says Watton.
“Also the property’s rentals 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 which links the motorway interchange and Esmonde Rd with Anzac St and Taharoto Rd to the north.
Mimmack says Barrys Point Rd is popular because of its proximity to Takapuna’s CBD and beach and the Aorangi northern busway station which are all within comfortable walking distance. It is also near SH1 motorway interchanges providing excellent access to the Auckland CBD and to northern parts of the Shore.
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 1575 sq m corner site at 55 Barrys Point Rd for $5.775 million at a 4.95 per cent yield.