Royal redevelopment opportunity

West Auckland shopping centre on a 1.78ha redevelopment site

Royal Heights Shopping Centre in fast-growing West Auckland is being marketed for sale as a prime redevelopment opportunity with holding income.

Colliers International has been exclusively appointed to market the 1.78ha property at 138-144 Royal Road and 41 Widmore Drive, Massey, for sale by international private treaty.

Offers close at 4pm on 31 July, unless sold prior.

The property comprises a Countdown supermarket, five retail blocks and extensive car parking across two freehold sites with Neighbourhood Centre zoning.

Gareth Fraser, Auckland Director of Investment Sales at Colliers International, is marketing the property with Blair Peterken, Peter Herdson and Josh Coburn of the Capital Markets and West Auckland teams.

He says the site’s favourable zoning offers huge flexibility for extensive residential, retail, retirement or mixed-use redevelopment.

“This is an outstanding opportunity to acquire 1.78ha of prime development land on a prominent corner site within one of Auckland’s fastest growing locations,” Fraser says.

“The property currently comprises a neighbourhood shopping centre with 21 retail tenancies, a supermarket, an ATM and a cell site, all of which service the rapidly growing residential suburbs of Massey and Royal Heights.

“With a net passing income of $785,540, developers and land-bankers can draw on useful holding income while they make plans to unlock the site’s maximum potential.

“Short leases with expansion or relocation clauses allow for imminent redevelopment, while the property’s layout allows for staged development of the site.

“Savvy investors and developers will not want to miss this rare opportunity to acquire a substantial redevelopment site in one of Auckland’s fastest growing locations.”

Peterken says Royal Heights Shopping Centre is located between fast-growing Westgate and the increasingly popular residential suburb of Te Atatu Peninsula.

“The property is superbly positioned to capitalise on West Auckland’s phenomenal growth. It is located only 1.5km from Westgate town centre, 6km from Henderson, and 16km from Auckland’s CBD, which is 15 minutes’ drive away.

“The key Western Ring Route motorways are nearby, offering excellent connectivity to Auckland Airport via the Waterview Tunnel and the North Shore via the Upper Harbour Motorway.”

Peterken says the site, zoning and structure of the leases ensure the property has abundant redevelopment potential.

“Because of this potential, the existing owners have not focussed on leasing vacancies or maximising terms with existing tenants. This gives a new owner the opportunity to negotiate the lease terms.

“A combination of re-leasing and staging the redevelopment would allow the new owners to increase the holding income pending future redevelopment.”

Herdson says the property’s layout makes it well suited to a staged redevelopment, while its low site coverage and the potential for greater density allow for a variety of development types.

“Anchor tenant Countdown is signed to a short lease that allows the underlying land to be redeveloped imminently, underpinning the value of the property,” he says.

“Potential buyers also have the opportunity to maximise the existing buildings and service infrastructure, perhaps looking to extend or supplement refurbished retail spaces with higher value residential development.”

Herdson says that in addition to housing, the site would suit a variety of uses including childcare, retirement or additional retail units.

“The recent development of townhouses in the immediate vicinity, including a Fletcher Living development, offers evidence of the strong demand for residential development in the area.

“The nearby Royal Heights Rest Home is a strong indicator of the demand for aged care in the area, while the rarity of Neighbourhood Centre zoned land offers vast potential for retail enhancement.”

Coburn says the shopping centre is on an elevated site with views towards Auckland’s northwestern suburbs.

“The large corner site sits at the confluence of Royal Road, Moire Road and Widmore Drive, with substantial road frontages on all three sides.

“The property’s northeastern boundary is neighboured by residential development, which is forecast for significant intensification.”

Coburn says the property is accessed via four vehicle crossings – two on Royal Road and one each on Moire Road and Widmore Road.

“Royal Road is the key arterial route serving the established residential suburb of Royal Heights,” he says.

“The road links up with the Northwestern Motorway (State Highway 16) some 200m to the west and continues on to Don Buck Road at Massey West.

“The motorway forms a key part of the newly completed Western Ring Route, linking up with SH20 to the southeast via the Waterview Tunnel and SH18 to the northeast.

“Additional motorway infrastructure upgrades are underway and light rail is proposed to Westgate from the CBD, which will further improve the area.”

Coburn says the smaller of the property’s two titles is at 41 Widmore Drive. It has a land area of about 7,459sq m and a large 2,459sq m building tenanted by Countdown.

The larger title at 138-144 Royal Road has a land area of 10,412sq m and a total building area of 2,628sq m comprised of single level, plaza-style retail development.

Both titles have substantial areas of sealed car parking, providing space for some 263 vehicles.

This equates to 5.25 car parking spaces per 100sq m of gross lettable area – a favourable ratio when benchmarked against similar centres.

An open basement car park is located below the supermarket building, making use of the land’s contour.

The property has 16 existing tenants, including NZ Post, a locksmith, bakery, cafe, laundromat, liquor store, medical centre and restaurant.

There are eight vacant units totalling approximately 979.19sq m.

Most of the specialty retailers are local tenants with businesses focussed on convenience for the immediate catchment.”

The shopping centre was built in the late 1970s, while the supermarket was built in 1983 and a smaller building, currently tenanted by the locksmith, was built in 1995.

The original shops, which are generally linked by a covered veranda, have undergone several alterations since their construction. The supermarket underwent extensive tenant refurbishment in 2009.

All of the buildings meet 100 per cent of seismic standards, with the exception of the supermarket which has a 64 per cent NBS rating.

This is not expected to have an impact on the property’ value given that the supermarket is proposed for redevelopment.

Fraser says strong enquiry from a variety of sectors is expected.

“With its prime corner position, favourable zoning, established residential location and proximity to motorways, Royal Heights Shopping Centre is an obvious redevelopment or add-value prospect.”

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