City snips with a fringe on top

Family trusts and individual investors need not feel that the commercial and industrial property market is now beyond their reach.

Although trustees and newcomers to commercial property may despair at the multimillion-dollar figures required to purchase quality CBD buildings, or to develop large-scale industrial parks and mega-retail centres, smaller investors still have a very buoyant and active Auckland city fringe to draw on.

"City fringe areas from Parnell and around to Grey Lynn are all in high demand," said Peter Churchill, corporate sales manager for Barfoot & Thompson Commercial.

"The owner-occupier and live-at-work purchaser is a market showing significant strength at the moment. Also smaller business owners seeking to escape from a rising rent trap are often prepared to pay premium prices for properties close to their customer base in the central city."

More car parking for visitors and employees, being minutes away from city clients, and good motorway access are some of the advantages city fringe businesses enjoy over competitors located further afield or in central Auckland itself.

Churchill says owners of smaller to medium-sized businesses are also viewing the ownership of their buildings and land like "personally controlled superannuation schemes", knowing that they are likely to reap large capital returns when they eventually decide to sell up and retire.

"Another reason for the strong demand for commercial and industrial properties in the city fringe areas is the fact that no more land is being zoned for business in these areas so it's a simple supply and demand equation that is bound to push prices for city fringe properties long term."

An example of a city fringe offering with plenty of development potential is a 2784sq m site at 424 and 428 Great North Rd in Grey Lynn, consisting of two separate properties, of 1115sq m and 1669sq m respectively - each occupied by two rear tenancies.

"It may be possible to purchase both or either of the properties separately," says Rick Hamilton of Barfoot & Thompson Commercial, who is selling the property with colleague Warwick Lewis.

A Wall Motors car sales yard with modern offices and basement workshop occupies the frontage of both properties, with high visibility to busy Great North Rd. The rear of 424 is occupied by a car grooming company within an older industrial building of 472sq m containing a warehouse, offices and workshop.

At 428 Great North Rd, the rear industrial building is occupied by Plasmark (NZ) Ltd, which produces gold blocked, hot stamped and plastic foil stamped products.

"The four leased properties bring in $169,692 plus GST net annually," Hamilton said.

"A possible option for a purchaser would be to develop the site keeping the existing tenants in place or land banking for future development."

Tenders for the property close at 4pm on Wednesday, September 6, at the offices of Barfoot & Thompson Commercial, Kitchener St, Auckland.

Hamilton says the property is zoned Business 4-mixed use, which permits a wide range of uses including retail, cafes, light industrial, healthcare services, building or garden suppliers, entertainment, warehousing and residential units.

"The Business 4-mixed use zoning reflects a closeness to residential areas, which means the site is ideally situated for future development into apartment blocks or residential units, which are now becoming a feature in the Grey Lynn and Ponsonby areas," Hamilton says. An attraction of the property is its closeness to the western motorway only 1.5 km away while the on and off ramps to the northern and southern motorways are 2.5km away.

Another commercial property within range of an individual investor or family trust is the Newmarket Returned Services Association premises occupying a ground-floor corner unit title within a 1980s development of four units at the corner of Melrose and Roxburgh Sts, Newmarket. The 627sq m unit on a 1823sq m site is at 3A Melrose St, which opens on to Khyber Pass Rd, close to the Gillies Ave southern motorway off/on ramp, and is being sold through Wayne Muir and Cam Paterson of Barfoot & Thompson Commercial.

Also zoned Business 4-mixed use, the property will be auctioned at Barfoot & Thompson Commercial offices at 1.30pm on September 6 unless sold prior to that date.

"This property has level street frontage in an area with a mixture of retail, showroom, office and service industry businesses," Muir said. "There is parking for 13 vehicles on the roof of the building."

Muir says a number of factors have resulted in the RSA deciding to sell the property, including declining membership and strict drink-driving laws.

However, the unit does contain the assets suitable for a hospitality or entertainment-styled business, including large, fully equipped kitchen, separate dining room, storage and chiller rooms, and a big carpeted bar area with dance floor and bandstand.

"Smaller investors and family trustees will also appreciate its prime corner location within a commercial area where there are businesses like furniture showrooms and retail outlets." Muir notes that, although city fringe areas have been noted for relatively low annual rental yields, the true value of these properties is in their significant capital gain potential.

A third city fringe property likely to attract smaller investors and family trustees consists of two shops at 100 and 102 Richmond Rd in Ponsonby.

Barfoot & Thompson Commercial agent Redvers McCabe says the shops have net rentable floor areas of 57.23sq m each and are held on a single freehold certificate of title.

The first is tenanted to fashion retailer Trelise Cooper and the second, at 102 Richmond Rd, is rented by antiques dealer Piper Antiques. Total rental income from both shops, which have heavy traffic exposure, is $52,000 per annum plus GST. Both will be auctioned at Barfoot & Thompson Commercial on September 13 (1.30pm).