Allsop says it is likely to be viewed by the market primarily as an add-value or redevelopment opportunity, although it does make an excellent investment as it is.
"This is a large 999sq m parcel of land in an area which is likely to experience sharply rising property values and rents as a result of the Vinegar Lane project getting under way. This will prompt a general uplift in the calibre of occupiers along this part of Ponsonby Rd and this will be reflected in increased rental rates," Allsop says.
"The most obvious and immediate opportunity to enhance the value of this property would be an examination of the current lease structure and managing it to increase the total income and weighted average lease terms, along with adding another floor to the building."
Dromgool says developers are also expected to show interest in the property, given its prime location and substantial land holding. "Current zoning allows for residential use on this site, as well as for a third level to be added. It's likely that there could be significant redevelopment upside here, with a developer able to incorporate a mix of shops, offices and apartments.
"With some tenants on monthly leases and others with redevelopment clauses, the property would also be a candidate for a more immediate refurbishment and re-letting as modern retail and office space," Dromgool says.
The building contains ground-floor retail units, office space on the first floor and to the rear of the site, and 10 off-street car parks behind the building. "It has an excellent north-eastern view over Western Park and we expect it to be a strong selling point," Allsop says.
Dromgool says Ponsonby Rd commercial property tends to be tightly held and its status as one of Auckland's top destination retail precincts is well established. "Nearby, the Hopetoun St ridge is undergoing rapid change as new apartment developments and building conversions have rejuvenated the former office precinct. Within a 2km radius, more than 400 apartments are under construction, most of which have been sold off the plans."
Vinegar Lane is the latest in a string of key commercial or mixed use property projects for the area, he says. "Another noteworthy recent development is Ponsonby Central, which has proved very popular among occupiers and shoppers, with a great range of retail and food offerings making the development a destination in itself."
Allsop says Ponsonby Rd has an excellent leasing history and benefits from easy access to the CBD, as well as from being near to a large and affluent residential catchment. It provides a good retail mix aimed at high-end shoppers as well as high-quality smaller business premises. "Properties along Ponsonby Rd are highly sought after and hold 'trophy' value."
Progressive Enterprises' plans for the wider Vinegar Lane development include a Countdown, offices, retail space and apartment buildings on a large 1.3ha site which was once occupied by the DYC vinegar factory.
A cornerstone part of the $200 million scheme is the Cider Building, which will offer three levels of offices above the supermarket and retail outlets on the ground floor, on Williamson Ave and Pollen St.
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