Golden opportunity opens up in sought-after Wellington precinct

Chews Lane hosts office buildings, apartments, retail, eateries and bars. Photo / Supplied

Five individually titled retail investment properties along the Wellington CBD's "golden mile" are for sale in a rare opportunity for small to medium-sized investors.

The shops are located in the Chews Lane precinct, the award-winning redevelopment of a CBD block to create an exciting new destination containing an eclectic mix of heritage and modern office buildings, apartments and retail, eateries and bars.

Four of the shops, on Willis St, are leased to fashion brands, while the fifth in Chews Lane is occupied by a sushi outlet. Their leases all began in 2008 and extend until 2014 to 2022.

They are for sale by tender through Bayleys Wellington on behalf of vendor AMP NZ Office Trust (ANZO) which acquired the office, carparking and retail component of the newly completed complex from developer Willis Bond & Co in 2008. The tenders close on Tuesday, March 30.

ANZO's purchase was led primarily by the opportunity to acquire the office space, which comprised 80 per cent of the area and was fully leased for 15 years to a government tenant. However, the retail space is not a core investment for ANZO, which is the country's largest listed investor in commercial office property and owns a portfolio valued at more than $1.3 billion.

Bayleys' Mark Sherlock says opportunities for individual investors to purchase a stake in "golden mile" retail properties are extremely rare as the majority are incorporated within larger office buildings.

The Willis Precinct, in which Chews Lane is located, shared the lowest vacancy rate in the CBD along with Courtenay Place in Bayleys Research's latest Wellington CBD retail survey. The survey notes that the precinct has benefited from the redevelopment of the Chews Lane area, strong tenant brands and high foot traffic counts.

The future outlook is even brighter, says Sherlock. The new Telecom Tower currently under construction adjacent to Chews Lane will bring a further 1500 people into the area when it is completed next year.

With net annual rentals ranging from approximately $43,000 to $274,000, the five units are in a price range that is popular with small to medium investors and family trusts, says Sherlock, and offer the advantages of new retail space in a vibrant location, leased predominantly to well-established retailers.

The largest unit is leased to Farrys For Men, an upmarket menswear shop which is a well-established brand in the Wellington CBD retail clothing market and also has shops in High St in central Auckland and George St, Dunedin.

The other shops for sale on Willis St are also leased to fashion clothing and accessories retailers - Lippy, which is a subsidiary of national retailer Wild Pair and specialises in fashion clothing and accessories for young women, Staxs and Stable.

The smallest shop for sale is occupied by Midland Sushi which opened a second central Wellington business in Chews Lane following the success of an outlet in Waring Taylor St.

The Staxs and Lippy leases have built-in rental growth, with annual fixed rental increases of 4 per cent through to the end of their leases, while the other three have ratcheted two-yearly rent reviews to market levels.

The $175 million revitalisation of the Chews Lane block is the largest mixed-use redevelopment ever undertaken in Wellington.

The project took out the prestigious Supreme Award for the year's best development at the 2009 Property Council Rider Levett Bucknall Property Awards, and also received excellence awards for best mixed-use and urban design developments.