The landmark Southern Cross Building on Ellerslie’s main shopping strip has been placed on the market for sale by auction, offering a high profile, multi tenanted commercial property investment.
The freehold character building at 87 Main Highway, Auckland is being marketed for sale by Charlie Oscroft and John Green of Colliers International.
The property, which is featured in Colliers International’s latest National Portfolio magazine, is due to go under the hammer at 11am on October 31 at 151 Queen St, Auckland, unless it sells before the auction day.
The building began its life in 1925 as the Southern Cross Picture Theatre, Oscroft says. “It later served as squash courts before being purchased in 2009 by Broadway Property Group, the current owner, which completed significant seismic upgrading, restoration and renovation work in the middle of last year.”
Four tenancies; occupied by Glengarry, Long Island Fashion, The Fitness Club and the well-known Tui billboard overlooking the Southern Motorway provide net annual rental income of $398,314. Future income growth is provided through regular CPI-linked rent reviews, which are built into all the lease agreements.
John Green says the iconic property’s combination of a high-profile location, long term leases, quality refurbishment and tenant covenants make it a desirable investment offering. “This property ticks all the boxes for commercial property investors, offering the crucial fundamentals of location, build quality, strong tenants and long term, growing income streams,” he says.
John Bowring, Colliers International’s national auction manager, expects the property to appeal to a number of buyers on auction day. “The building’s recent renovation and seismic strength mean we expect to receive significant interest in the auction room from commercial property investors looking for a future-proof holding in a popular retail location.”
Adrian Hughes, development manager at Broadway Property Group, says the building was in a “tired, run-down state” when it was purchased in 2009, before the renovation (designed by Godward Guthrie Architects) commenced.
“The building had been used as squash courts with ground floor retail since 1970, however the popularity of the squash courts declined and the building fell into disrepair. We saw this as an opportunity to restore the building’s original character using urban design principles, and to strengthen it and upgrade it with modern, efficient systems.”
An engineers’ report has been commissioned and this shows the building complies with over 85% of current earthquake code, Hughes says.
“We are very happy with the quality of the refurbishment, which we believe will ensure the building’s ongoing commercial viability, while contributing to the vitality of Ellerslie town centre.”
The refurbishment involved the entire building being completely gutted and rebuilt to current seismic standards – a major project overseen by two engineers, one of which is a specialist seismic engineer, says Hughes. The work included installing an extra one and a half floors within the structure, reinforcing the foundations and adding a concrete lift shaft that acts as the building’s structural core.
The building was also completely re-wired with new lighting, power points, switches and separate metering for each tenancy, including the billboard, Hughes says.
“We also installed new ventilation throughout and air-conditioning where required, as well as a complete repaint inside and out.”
Care was taken to preserve and enhance various character features from throughout the building’s life, he says. “The exposed oregon ceiling beams have been preserved and reinforced, and the tawa flooring from the squash courts has also been recycled and used to line the ceilings.”
Urban planners were brought in to ensure the “character of the era” was preserved in the building’s façade, while at the same time adding new windows and enlarging existing ones.
New floor-to-ceiling glazing to the ground floor retail frontages further modernises the building, Hughes says. “The end result is a complete re-positioning of the property, with national tenants on long term leases in a fully upgraded and refurbished structure.
“The Southern Cross Building has an important place in the fabric of Ellerslie’s history, and we’re very proud that it now enhances the streetscape as one of the few remaining character buildings on the street.”
The tenants, which are well-known national and local names, had all signed up to take space in the building before the renovation was complete, Hughes says. “This shows the demand among retailers and service providers, who have recognised the growing popularity of Ellerslie and are keen to secure premises in the area.”
Glengarry Hancocks Ltd occupies one of the two ground floor retail tenancies; a 185sq m space. The company, which is the largest family-owned liquor retailer in New Zealand, holds an eight-year lease dating from September 2011 with rights of renewal providing the option to extend for up to six further years.
The other ground floor unit, with a floor area of 168sq m, is leased to Long Island Fashion for six years dating from July 2011, with the right to renew for a further four-year term. The company was established in Christchurch as a catalogue fashion marketer, Hughes says. “It now has over 25,000 active customers and five retail outlets in Auckland, Wellington and Christchurch to complement the catalogue offering.”
The upper floors are exclusively occupied by The Fitness Club (previously Harbour Fitness), with stair or lift access via a tiled entry foyer. The 855sq m facility includes brand new changing facilities, an extensive range of new gym equipment and has attracted over 700 members since opening in July last year. The Fitness Club has a 12 year lease dating from March 2011, with the right to renew for a further six years.
“This property provides flexible space, and also benefits from the demand for suburban office and retail premises in areas with good transport links and plenty of parking. These factors mean the retail units should always be in demand, and the upstairs areas would also lend themselves very well to other uses such as character offices,” says Oscroft.
The Tui billboard has resource consent and is registered with Auckland City Council. It has a six-year lease dating from February 2010, with the right to renew for a further six years.
Retail spending in Ellerslie has grown over the past year, while other competing retail precincts have demonstrated an opposite trend, says Green.
A Marketview report prepared for Auckland Council shows a 3.4% increase in spending in Ellerslie over the year to June 2012, compared with decreases of -0.7% in Newmarket, -5.3% in Remuera and -10.5% in St Heliers.
Public transport links mean the village is frequently visited by people from a much broader catchment, who use the train and bus connections provided in the village to travel into the city, says Oscroft.
“Buses stop directly outside the Southern Cross Building and the railway station is accessed via the pedestrian overbridge directly adjacent to the property which crosses the motorway, as well as an underpass. This provides a large potential customer base for the building’s retail shops and gym.”
The pedestrian bridge and underpass also connect the hundreds of office staff in the nearby office parks with Ellerslie village, providing them with easy access to shops, cafes and bars, Oscroft says.
“We are delighted to take this well-located, high profile character building to the investment market.”
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