The land and buildings housing a neighbourhood block of complimentary retail businesses in South Auckland have been placed on the market for sale.
The freehold property at 89 Princes Street, in central Otahuhu, offers a 348sq m single-level building on 680sq m of land zoned Business Neighbourhood Centre under the Auckland unitary Plan.
It is located in a high-traffic location, close to major arterials and the Princes Street off-ramp for the Southern Motorway, and is surrounded by a large residential population.
The tenants are three well-established small retailers – a dairy, superette and snack food outlet – and trade mainly in staple goods, fruit and vegetables and snack food.
Together, the tenancies generate an annual net rental income of $88,000 plus GST, with leases ranging from 12 months to four years with options to renew.
Bayleys sales agents Tony Chaudhary, Ash Jogia and Amy Weng are marketing the property for sale by auction on Wednesday, March 7, unless sold prior.
Mr Chaudhary says that with the three separate retail tenancies, the block offers potential buyers a split-risk investment opportunity with built-in rental growth.
“The property will be of interest to long-term investors. Convenience retail is strong performer at the smaller end market. However, there is flexibility in the lease options, which could allow for future development,” he says.
“Business Neighbourhood Centre zoning applies to single corner stores or small shopping strips located in residential neighbourhoods. A developer could potentially add two further storeys to the building for residential use.”
89 Princes Street comprises five units:
• Units one and two, which have been combined, are leased to the owner-operator of Motorway Dairy and Lotto until 2020 with two four-year rights of renewal. The tenancy generates $52,174 plus GST in annual net rental income, with a rent review built in every two years.
• Unit three is leased to Kowhai Superette Limited until October 2020 with an option to extend to September 2032. The tenancy generates $22,250 plus GST in annual net rental income, with a rent review built in every two years.
• Unit four is leased to Indian snack food seller Balaji Sweets and Snack NZ Limited until September 2019 with an option to extend to September 2022. The tenancy generates $22,250 plus GST in annual net rental income, with the rent due for review in September 2019.
• A fifth unit is vacant and leased to Motorway Dairy and Lotto.
Mr Chaudhary says the long, rectangular 3.5m block was constructed in 1965 and has a seismic rating of 70 percent of NBS. “It features concrete footings, corrugated iron roofing, timber purlins and beams, reinforced block masonry walls, reinforced concrete columns and steel roof bracing.
“Also of note is the property’s parking provision on both Princes and Albert streets – convenient for passing motor-vehicle traffic.”
Mr Chaudhary says: “Small to medium-sized commercial properties occupied by convenience stores are staple assets in many property portfolios. They suit passive investors as they offer a secure long-term income from established, stable tenants.
“The corner dairy and the superette are integral to Kiwi life and visible in almost every community across the country. They role they play in their individual local economies is critical - they provide users a convenient place to grab everyday essentials that would otherwise require a trip to the supermarket.”
He adds: “Otahuhu itself is a thriving, culturally diverse suburb, offering easy access to several Auckland business districts, including East Tamaki, Manukau City, Penrose, Mt Wellington and Sylvia Park.
“Otahuhu is enjoying strong levels of investor activity, due to the rapid transformation of the area. It has become increasingly attractive to big name brands and developers.”