A beachside retail building occupied by national brand-name tenants on long leases in Browns Bay, on Auckland’s North Shore, is being offered for sale by auction on behalf of Viaduct Waterfront Investments Ltd.
55 Clyde Road, North Shore is being marketed by Tony Allsop, Andrew Hiskens and Tim Lichtenstein of Colliers International and is due to go under the hammer on July 25 at 151 Queen Street, Auckland, unless it is sold before the auction date.
The 1200sq m two-level building houses four units; occupied by New Zealand Post, Starbucks and AMI Insurance, as well as a first-floor bar. Together the tenancies generate net annual rental income of $346,000.
The property is an excellent long-term investment holding but it also has redevelopment potential, Allsop says. “Current zoning makes the site a great development opportunity, with the potential to construct a mixed-use property of up to four storeys high. Such a development could feature retail and/or hospitality premises on the lower floors with apartments above, for example.”
There is also great potential to capitalise on the views and aspect of the property on both existing levels, Hiskens says. “Many properties on Clyde Road are being reconfigured to face the Hauraki Gulf and make the most of the attractive beachfront location – such is the popularity of the beach-facing cafes which are already operating along this strip.”
Property and tenants
The 1980s building, which sits on a high profile 852sq m freehold site in the centre of the busy Browns Bay commercial centre, was extensively altered and redeveloped in 1993.
The ground floor houses three retail tenancies, with New Zealand Post occupying the beach-side unit. Starbucks occupies the corner unit with frontage to Clyde Rd and the adjacent pedestrian mall, with AMI next door along the Clyde Rd frontage.
The existing leases provide a very strong tenant covenant, Lichtenstein says. “The building area is 31% leased to New Zealand Post, with another 32% leased to AMI Insurance and Starbucks, both of which are backed by major parent companies,” he says. “The leases all have rent reviews built in, giving the potential for income growth in the future.”
New Zealand Post occupies a 365sq m unit on a nine-year lease term expiring in May 2018, with two further rights of renewal of three years each. AMI, which is a wholly-owned subsidiary of Australian insurance group IAG, occupies 184sq m of floor area on a 12-year lease expiring in February 2017, with the right to renew for two further terms of three years each.
Starbucks is owned by fast-food franchise operator Restaurant Brands New Zealand Ltd, which also manages the KFC, Pizza Hut and Carl’s Jnr chains in New Zealand. Starbucks occupies a 201sq m unit on a 10-year lease expiring in February 2019, with two further rights of renewal of six years and five years respectively.
The 447sq m upstairs unit is home to Echo Bar, which offers live music, gaming, food and private functions. The large balcony offers unobstructed views overlooking Rangitoto and across to the Coromandel Peninsula. Echo Bar holds a three-year lease expiring in April 2013.
John Bowring, national auction manager at Colliers International, says the four separate income streams offer security to investors. “Three out of the four leases are in place for extended periods, offering long-term income to investors; while the upstairs unit, with its views and outlook over the beachfront promenade, offers plenty of potential for future occupiers to make the most of this popular location should the existing tenant move out.”
55 Clyde Road is part of the well known and established Browns Bay shopping precinct, which is home to national brand-name tenants such as ANZ, OPSM, Flight Centre, Pizza Hut, Paper Plus, Westpac, ASB and many more.
Although Browns Bay is a coastal suburb, it also benefits from good motorway and public transport links making it a sought after location among retail and commercial tenants. This has fuelled significant recent development, Hiskens says.
“In recent years, several low rise apartment developments have been introduced in Browns Bay with the aim of revitalising the area for population growth,” he says. “Future development along Clyde Road is also on the cards, which will further open up the commercial precinct to the popular beachfront.”
Browns Bay also benefits from good motorway and public transport links and is only 19km from the Auckland CBD – approximately a 20-minute drive off-peak, says Hiskens.
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