Prime position at top of Parnell Rise offers solid income streams

Large land holdings in Parnell such as this pair of buildings at 46 Parnell Rd rarely become available.

A high-profile commercial building and big land holding, occupying a dominant position on Parnell Rd with excellent Auckland city and harbour views, is for sale in Colliers International's first New Zealand Portfolio publication for 2014.

The 4365sq m property at 46 Parnell Rd opposite Fraser Park comprises two buildings on a 2071sq m site - a six-level office building anchored by tenants Heinz Watties and Westpac; and a smaller character building at the front leased to a trendy bar and restaurant.

"Large land holdings on Parnell Rd rarely become available," says Colliers' broker Andrew Reed, who, with colleague John Green of the agency's corporate and institutional sales team, is marketing it for sale by private treaty closing at 4pm on Thursday, March 13.

Reed says the property's prominent position on the crest of the hill overlooking the city at the intersection of Parnell Rd and Parnell Rise will make it an attractive proposition for purchasers looking for an investment in one of Auckland's most sought-after locations.

"The income is secured by a mix of high-quality tenants, and the property has significant potential for long-term capital appreciation offered by the large land holding," Reed says.

Five tenants across both buildings generate a net passing income of $1,262,884 a year plus GST, witha weighted average lease termof about five years. "The majority of the income is from two very stable and well-known companies, and the security of the cash flow is a key attraction of this investment," Reed says.

"Westpac Bank has occupied the building for about 20 years and Heinz Watties has occupied the building since the late 90s.

"Heinz Watties accounts for around 64 per cent of the total rental income of the property and the two large tenants together provide nearly 79 per cent of the property's net income. The other tenants are UMR Research and Pacific Association of Supreme Audit Institutions. In the smaller front building is a hot new restaurant and bar called 46 & York."

The main building was constructed in the mid-1980s and has four levels of office space with views over the harbour and city along with two levels of basement car-parking for 81 vehicles. The ground-floor retail space is leased to Westpac.

Green says the building is expected to have an 80 per cent New Building Standard (NBS) seismic rating following completion of planned works over the next few months. One vacant floor with a total area of 1072sq m has been refurbished and is available for lease. It could be divided into more than one tenancy if required.

"Investors will be attracted to the immediate upside available through leasing the floor as a whole or splitting it up," Reed says.

The front building leased to bar and restaurant 46 & York is a small two-level character building.

"Its interior was recently given a designer makeover for the opening of the restaurant and bar and its success is being seen as indicative of Parnell's revitalisation," Green says.

"In past years the central Auckland area has attracted more of the city's new restaurants and cafes but attention is now returning to Parnell, which is New Zealand's oldest suburb renowned for its historic buildings, beautiful parks, galleries, cafes, restaurants and charming boutique-styled stores. Lately it has become more popular with young professionals who want to be part of a thriving urban community. Parnell has one of the most affluent demographics in the city, and the latest Census figures show the area is growing quickly."

Green says the property is within walking distance of the CBD and benefits from Parnell's exceptional public transport links to the city and other Auckland suburbs via rail and bus routes.

"It has immediate access to all of Auckland's motorway systems via Parnell Rd and Stanley St. Auckland Transport is also developing a new station at Parnell. It is due to open in late 2015 and is predicted to be one of the busiest stations in Auckland."

Green expects the property will attract strong interest from family trusts, institutional buyers and high net worth individual buyers from New Zealand and Asia.