‘ Eden factor’ enhances corner site property
Colliers International agents say good retail sites for sale in Mt Eden Village — “perhaps the most affluent such shopping centre in Auckland” — are a rarity.
Broker Peter Kermode and colleagues Adam White and Gawan Bakshi are marketing 395 Mount Eden Rd, a 378sq m freehold property, which is for sale by auction on October 12, unless it sells earlier by negotiation.
“Overseas investors — possibly in Beijing or London — may not fully grasp the status of Mt Eden Village in terms of Auckland’s context and future,” Kermode says. “Although it is relatively small, Mount Eden Village is a tight- knit, vibrant community comprising some of Auckland’s movers and shakers.
“This property commands a prominent corner site at the northern gateway to Mt Eden Village, offering unparalleled exposure and excellent access to street parking. It returns a total net rental of $ 195,000 per year, plus GST, and has a weighted average lease term of over six years.”
A recent fit- out and strong tenant covenant enhances the investment option — but Kermode thinks there is also a future angle to consider.
“The property’s current zoning is Business 2, which will be changed to Local Centre under the Unitary Plan, offering potential for a variety of future uses including residential,” he says. “This zoning allows for multilevel developments and future development could include ground floor retail, with a mix of office and residential space at the top.
“But this would have to be after the completion of the current lease terms.”
“Mt Eden is experiencing incredible change and this property will see all the benefits,” says Bakshi.
“It i s only 1.8km from SH1 northbound from Gillies Ave and 2.2km southbound from Market Rd,”
“Groundbreaking residential developments in the area include Botanica and Botanica Heritage, while Eden Park is only 1.8 km to the west,” says White.
“Mt Eden Train Station i s also earmarked for a major refurbishment under City Rail Link plans.”
The property is north- facing and comes with an outdoor dining area. It houses t wo tenants, Kebab Stop which has “institution” status in Mt Eden, and Corner Burger, and includes an APN outdoor billboard.
“Corner Burger is on an eight- year lease term, which began on March 7,” says Bakshi.
“It has rights of renewal for two six- year terms, including a market review every four years.
“It returns $ 120,000 pa plus GST. Kebab Stop is on a six- year lease, from December 1, 2014; it has one six- year right of renewal and currently returns $ 45,000 pa plus GST.”
“The APN outdoor billboard lease commenced on April 1, 2013 and is for a term of five years with two five- year rights of renewal,” says White.
“The rental was recently reviewed to $ 30,000 pa.
“The three rental streams combine to provide diversification and split- risk income.
“The property is on a broad northern boundary, arguably one of the best corner sites in the Mt Eden retail strip,” he says.
“About 15,000 cars go past every day, giving it a competitive edge over other properties.”
“Mt Eden is well known as a sought after inner- city suburb with a small but vibrant community,” adds Kermode. “This provides businesses located within the strip with an active and stable customer base, and the property’s positioning on a strategic corner provides additional profile and exposure.”
The property services an affluent demographic within Auckland and sits within 2km of Auckland Boys Grammar, says Bakshi.
“It’s only 4.5 km to downtown Auckland, 1km to Mt Eden Reserve and sits among a cluster of successful, longstanding hospitality offerings, including De Post Belgium Beer Cafe, Frasers Cafe, Circus Circus Cafe, Mantells and Molten.” A brand new childcare centre in Hillcrest is being described by brokers as an investment opportunity due to its sought- after location and modern facilities.
The property, at 51 Eban Avenue, is being marketed by Colliers International brokers Shoneet Chand and Peter Kermode. The centre, with a 270sq m floor area on a 900sq m freehold site, will be for sale by auction on October 5, unless sold earlier by negotiation.
“This single level- childcare centre has been purpose- built by established developers in the childcare sector and offers a high standard of construction with modern amenities, including multi- zone heating and cooling, intercom system, and a builtin multi zone sound system,” says Chand.
“The property sits opposite Willow Park Primary School, whose decile 9 rating reflects the high level of discretionary income of the surrounding demographic. The property is in a well- established area with high residential values which serve as a barrier to entry for other operators seeking to enter the market,” he adds.
It is next to a block of shops where abundant street parking is provided.
“The property, which is built to accommodate 58 children offers generous fully fenced outdoor play areas and sufficient on- site car parking,” says Kermode.
It is being offered with a 12- yearlease term from October 1 this year, returning $ 165,880 net per annum plus GST. There are three further 10- year rights of renewal. Brokers say the appealing factor for investors is the fixed rental growth of 2 per cent per annum built into the lease plus market reviews every six years.
Chand says childcare centres that manage to get a foothold in desirable areas with dense surrounding development have t a competitive advantage.
“Opportunities to build new centres are increasingly difficult with the soaring values of residential land and higher- density developments. Such centres become even more valuable,” he points out.
“Childcare centres are typically a single- tenant investment where the tenant manages all internal and external property related issues, making them sought after hands- free investments.
“Once a centre is developed and sold, it will tend to remain in the same ownership for extended periods.”
Kermode says childcare businesses are generally accompanied by a high level of goodwill tied to the physical property.
“A large part of the value of the business is associated with the property and the resource consent for childcare use. This is why childcare leases tend to be very long- term.”
“There is a low rate of building obsolescence in childcare facilities, so businesses,” says Chand.
“Childcare is viewed as an essential service across the political spectrum, therefore the funding lines it provides prove to be a reliable and secure option,” Kermode adds.
The property has easy access to parking and is only 1.75km to the State Highway 1 interchange at Northcote. Hillcrest is a neighbouring suburb to Northcote, well known for housing an affluent surrounding demographic.
“It’s only 400m to Ocean View Rd, 600m to Stancich Reserve and 1.25km to Onewa Reserve,” says Kermode.
“Under the Unitary Plan, the zoning for large areas within Hillcrest and Northcote will change from Residential 4A to Mixed Housing Suburban, which means there is a high likelihood of more intensive developments and notable population growth in the area,” says Chand.