Sit back and enjoy your investment

The Beach space is described as a complete passive investment opportunity. Photo / Supplied

The fully leased, newly-redeveloped, ground floor of The Beach residential building, which was formerly a Blue Chip asset, is being marketed for sale. Situated at 85 Beach Rd on the edge of the Auckland CBD, the ground floor space is occupied by Tourism Holdings, which has just signed a new six-year lease.

The freehold property at the junction of Beach Rd and Mahuhu Crescent will be sold by auction on March 3 at the offices of Colliers International at Level 27, 151 Queen St.

Colliers' broker Charlie Oscroft, who is managing the sale for developer Alderman Property with colleague James Thorburn, describes the property as "a complete passive investment opportunity".

Oscroft says the ground floor area generates a current rental income of $84,448.49 plus GST which is "guaranteed to grow". He says the property is ideal for an investor looking for "certainty of income growth in a new structure with a national tourism operator as the tenant".

Once a five storey 1950s printing works building, the structure was refurbished in 1990. Between 2004 and 2006 Blue Chip extended the building by eight storeys and converted it to 114 apartments, all of which were sold off the plan prior to the company's collapse in 2008. That year Alderman Property purchased the ground floor unit along with a number of other apartments in the building. Now that the development job is nearly complete, Alderman is looking to relinquish its interest in the property to pursue other opportunities.

"At the time that we purchased the property there were a number of works outstanding," says Aran Blackmore, development manager for Alderman. "For example, access for residents was through the principal ground floor unit. By working closely with the building's body corporate, the commercial and residential occupiers now have their own dedicated entries."

Thorburn says any mention of Blue Chip in relation to building "is strictly for the history books". He says Alderman has taken the building and redeveloped it into a completely ready and accessible set of spaces that are attracting high quality occupants

The freehold ground floor space for sale totals 419.23sq m, with a rentable office area of 178.53sq m and a services area of 131sq m which will be leased to the body corporate. The floor also has 67sq m of storage space, 26.8sq m of toilet facilities and a share of the 15.9sq m entranceway.

The new lease of the main commercial space to Tourism Holdings, trading as Kiwi Experience, brings in a net annual rental of $84,448.49 plus GST.

Thorburn says Kiwi Experience has installed a new fit out and will use the space for a transport and ticket sales office. It will also serve as a meeting point and will be reinforced by bus stop access on Beach Rd, within a few metres of the building. Tourism Holdings will continue to occupy the building next door, which it has leased for 10 years.

The property includes an easement granted to apartment owners for the 131sq m area that houses building services including fire protection and a server/communications room. "This will provide an annual rental of $20,391 through a perpetual body corporate lease, providing guaranteed income for the buyer," says Thorburn.

Oscroft says the building is situated on a major thoroughfare into and out of the city, with thousands of cars and pedestrians passing the site daily.

"The property has excellent profile and is close to Britomart and is 700 metres from Queen St. We call the area 'tourist central' because it is part of Auckland that is undergoing a real revival at the moment for a number of reasons."

Other facilities and businesses in the vicinity include the Vector Arena, and numerous national and multi-national retail and commercial businesses.

"Because a number of motorways start and end within metres of The Beach, the area is fast becoming a major transport hub connecting the national motorway system with regional and local rail, bus and ferry networks, which are only a short walk away," Oscroft says.

In addition, the redevelopment of Carlaw Park site has created a new link from Parnell to the CBD, resulting in accelerated revitalisation of the area.

"More people are coming to this area to work and to start or finish their New Zealand travel holidays," Oscroft says. "This area is becoming a hinge linking the CBD with Parnell, and the city with the rest of the country."

Thorburn says a decision to take the property to auction was made because it has a well-known tenant, a strong profile and guaranteed rental growth which means it should be popular with bidders.