Retail basket carries rich pickings

Westgate Shopping Centre (above) has six shops for auction. Photo / Supplied

A big basket of shops is up for sale within Bayleys' latest Total Property portfolio with close to thirty retail outlets to be auctioned in the agency's central Auckland auction room on September 22.

Chris Bayley, Bayleys' commercial and industrial general manager, says it is one of the largest and most varied selections of retail properties ever to be offered for sale at one time. Offerings range from individual strata title units within large shopping malls to others in smaller suburban retail complexes.

"A good number of the properties have annual net rentals of less than $100,000 which puts them in a popular price bracket for smaller investors, particularly for those looking to a establish a foothold in the retail property market or perhaps diversify out of the residential market," says Bayley.

"Retail properties, particularly at the higher quality end of the market, have remained popular with investors even during the market downturn, and the prime end of the market is showing solid improvement with vacancies decreasing after peaking in 2009."

The September 22 auction will be spearheaded by seven retail outlets in the Rialto Shopping Centre in Newmarket which are being marketed by a team of Bayleys Auckland agents headed by James Chan. Located on Newmarket's main Broadway retail strip and the Osborne St precinct, the freehold unit title shops are occupied by a variety of national and international tenants. They are producing net annual rental income ranging from $18,983 to $184,142.

Six shops are being auctioned individually in the Westgate Shopping Centre in West Auckland. Four are producing net rental income of less than $100,000 and are located close to a Countdown supermarket which is one of the centre's anchor tenants.

One has a new nine-year lease to Kiwibank/NZ Post at an initial rent of $98,404 per annum with annual CPI rent reviews. The smaller offerings include a United Travel outlet leased until November 2013 at $55,759 annually; a Harcourts office with a new six-year lease producing yearly rental of $46,708 with three-yearly rent reviews to the higher of market or CPI; and an optometrist's premises whose lease expires in 2013, with no renewal, and is producing current net income of $51,000 per annum.

The largest Westgate offering for auction is a 687 sq m unit leased to national pet bulk retailer Animates and producing a net annual rental income of $178,596. Animates took an assignment of lease on its premises from Bond & Bond Ltd and spent approximately $750,000 on the fit-out prior to commencing trading in December 2009. It has renewed the lease until December 2016.

The final Westgate outlet is a 335 sq m unit plus drive-through facility occupied by ASB Bank which is producing net rental income of $181,680 per annum. The bank recently renewed its lease until February 2017.

Marketing agent Stuart Bode of Bayleys Auckland Central, says a range of other shops at Westgate put up for auction by Bayleys earlier this year attracted strong investor interest, with seven units selling at yields of 6 per cent to 7.5 per cent and at prices ranging from $540,000 to $2,140,000.

The centre has a high-profile location at the intersection of the North Western Motorway and State Highway 16 and has more than 45,000 sq m of net floor area. It is anchored by large format retailers The Warehouse, Countdown, Farmers and Noel Leeming.

In the eastern suburbs, Unit D, 35 St Johns Rd, within the Meadowbank Shopping Centre and occupied by Paper Plus/Post Shop/Lotto outlet is for sale. The shop has been trading from its 368 sq m unit in the centre since 1997 and is producing net annual rental income of $129,000. The long-established shopping centre's catchment area encompasses a number of Auckland's affluent suburbs. The mall is anchored by a Countdown supermarket that has recently undergone a multi-million-dollar upgrade which has increased the centre's foot traffic and trade, says Geoff Wyatt of Bayleys Manukau who is marketing the unit with Nicolas Ching of Bayleys Auckland.

A number of outlets within suburban "strip" retail convenience centres are also included within the Total Property portfolio auction.

Chris Bayley says there has been significant growth in this segment of the market in recent years, with shoppers preferring the ease of shopping that these centres provide.

Five units for sale individually within 219-239 Moore St, Howick, are located within the expanding Botany area with many new homes, schools and colleges, and near a light industrial area.

"It's a highly visible, strategically positioned property off a main arterial route, with good access for passing motorists and approximately 2000 sq m of sealed car park catering for 88 cars," says Bayleys Auckland's Nicolas Ching who is marketing the units with Quinn Ngo and Mark Pittaway.

Ching says four of the units in the well-presented complex each have two tenants. The largest unit is producing net rental income of $154,085 per annum and is occupied by Fruit World, which has been an occupant since the centre opened in 2005, along with a factory outlet shop. Annual rental income on the other three units ranges from $70,794 to $96,639 with occupants including the Export Meat Warehouse, an internet cafe and a superette. All of the units have two-yearly rent reviews, mostly to a minimum of market or CPI.

A 327 sq m unit within the centre is being auctioned vacant and is currently split into two tenancies of 245 sq m and 82 sq m which presents an opportunity for an owner occupier to buy at below replacement cost.

Closer to the city, the building housing central Auckland's most well-known children's store is for sale. The Dorothy Butler Children's Bookshop has been operating out of a Herne Bay retail complex for over 12 years. The tenant recently renewed for another six years on its 174 sq m premises located in a high profile retail and office building on a prime corner site at the intersection of Jervois Rd and Ponsonby Rd.

The unit is producing total net annual rental income of $66,490. Terry Kim, of Bayleys North Shore Commercial, who is marketing the property with Corey Gooch of Bayleys Auckland, says the bookshop is the largest occupant in the two-level mixed use complex which was built in the 1980s.

Across the harbour bridge, Stephen and Belling, in conjunction with Claire Rawkins of Bayleys North Shore Commercial, are auctioning a 126 sq m cafe at 40 Arrenway Drive, Albany. Located within the Triton Plaza , with 45 common car parking spaces, the property has a new 10-year lease to the Champion Bakehouse at net annual rental income of $56,000 with three-yearly rent reviews to the greater of CPI or market rental.

Stephen says the cafe is located in a modern developing area, with many nearby office and industrial businesses, on a corner site with high visibility to a main arterial route.

On Greenhithe Rd, a prominent road front unit in a neighbourhood retail complex will also be auctioned. It has an eight year lease to the Greenhithe Cafe & Restaurant Ltd running from April last year at a net annual rental of $71,473.

Clint Barber, is marketing the property with colleague David Gubb of Bayleys Auckland and Christina Heaven of Bayleys North Shore Commercial,

Further north, two units in a similar centre on the corner of Karepiro Drive and Rishworth Avenue in the expanding Whangaparaoa area are being offered for sale together. Being marketed by Damian Stephen and Caleb Belling of Bayleys North Shore Commercial and Mustan Bagasra of Bayleys Orewa, they have six year leases to Hollywood Bakery Espresso and Raviz Indian Restaurant expiring in 2015 and 2016 respectively. The total net rental income of $100,000 per annum is split evenly between the two tenants.