Parnell character block offers chance to corner the market
One of the first commercial properties to come up for sale in Parnell’s St Georges Bay Rd for some years is the recently refurbished, fully leased character property on the corners of Faraday St, St Georges Bay Rd and Cleveland Rd.
The 2585sq m dual corner site has 148m of street frontage and houses a number of upmarket tenants such as designer kitchenware supplier Archant, office furniture designer and manufacturer Aspect Furniture and the privately owned top-end pet care facility Central Bark.
Marketing agent Henry Thompson of Whillans Realty Group says the two adjoining character buildings were fastidiously refurbished in 2017 by Krukziener Properties, and the largely retail showroom and office property is now fully tenanted and returning a net annual rental income of $1.9 million. The property generates an additional $115,000 in management fees.
Tenders close on September 2. Thompson says property in Parnell’s commercial area is tightly held by family property trusts and high net worth investors, and this is the first to become available for some time. These investors typically take a long-term and even a generational view to investment.
“There’ve been only two stand-alone commercial buildings on St Georges Bay Road that have sold in the last six years.”
While it is currently an excellent investment property, when the Auckland Council is required to adopt new intensity rules set out in the National Policy Statement on Urban Development by August next year, the site may become even more valuable.
“Under the current unitary plan you can build up to 21m (six levels), but this may increase further when the council releases changes to the Unitary Plan. Parnell is one of those areas, close to both the CBD and transport hubs.”
Thompson adds that the property is exceptionally well-located long term for luxury apartments and new premium grade office space, being located in Auckland’s double Grammar zone where residential prices achieve premiums anywhere between 10-25 per cent above similar properties that are out-of-zone.
It is currently zoned mixed use (allowing the 21m height limit) and has 18 secure parking spaces onsite.
Meanwhile it offers investors exposure to a mix of premium tenants, with around 73 per cent of the income derived from the showroom and retail tenants. Thompson adds that nearly all of the leases have structured rental growth and the property has a weighted average lease term to expiry of 3.5 years.
No single tenant accounts for more than 22 per cent of the total income stream, and the largest tenant has over 5.5 years to run on their current term.
Future development potential has been built in, with vacant possession available from 2027. This is made possible by the length of the leases and landlord termination clauses, Thompson adds.
He says that the area has even more appeal these days with Parnell having central Auckland’s lowest office vacancy rate, currently standing at just 5 per cent.
The older of the two buildings fronting 109-115 St Georges Bay Rd, on the corner of Faraday St, was refurbished into nine office suites and nine ground floor retail units. It was originally built in the 1930s and operated as a paper store and packaging business.
The second building at 99-107 St Georges Bay Rd, on the corner of Cleveland Rd, was originally developed in the 1950s and has been converted into showroom space.