Sought after spot becomes available

Oakley is a well-known brand with outlets around the world. It has a long-term lease on the shop.

Strong tenant and top position make this Queen St retail space an attractive prospect for investors

A ground-floor retail unit occupied by Oakley on a long lease in the heart Auckland's CBD at 99 Queen St offers investors a strong tenant covenant with a global retail brand.

The unit is being marketed for auction sale by John Green, John Davies and Kris Ongley of Colliers International and is due to go under the hammer at 1pm on August 14 at 151 Queen St, Auckland.

The property, which is producing net annual rental income of about $405,000, is leased to Oakley for a 10-year term expiring in June 2018, with rights of renewal giving the tenant the option to extend for a further five years, giving a possible final expiry of June 2023. Annual rental increases equal to the consumer price index plus 1.5 per cent are built in, providing a growing income stream.

Davies says the strength of Oakley's covenant is a considerable plus for prospective buyers. "Oakley is a very well-known and recognised brand worldwide. Since it was founded in 1975, it has grown to become a global icon offering products to consumers in more than 100 countries."

The company provides performance clothing and accessories and has been awarded nearly 600 patents.

"Oakley has run its flagship Auckland store from the premises since 2008," Davies says. "The brand is well-established at this location, which gives it a highly visible presence on the prime retail thoroughfare of Queen St, among other global brands including Billabong, Quicksilver, Louis Vuitton and Gucci. With a prominent frontage to Queen St, directly opposite Fort St, and with a pedestrian thoroughfare alongside, the property has a high profile."

Upon commencement of its lease, Oakley completed a high quality fit-out of its 166sq m space, which has been well maintained since, says Davies. The tenancy also includes a 90sq m basement storage area.

Green says the property represents the type of well-located, strongly tenanted investment stock which is in demand at the moment.

"Investment properties with good fundamentals are very popular right now, given the low borrowing rates available and the yields provided on commercial property compared with other asset classes."

He says the property's prime position makes it a premier investment in the Auckland CBD.

"Well-leased buildings in the Queen St retail hub are tightly held and have a 'trophy' value, in that their brand-name tenants are easily visible to people driving past or shopping in central Auckland. This value is also enhanced by the quality of the other retail occupiers in the area, which are well-established and serve high numbers of office workers, shoppers and tourists daily."

The latest Heart of the City Auckland city centre pedestrian count report showed that 45 Queen St, less than a block north of the Oakley store, had an average of 22,586 people passing each weekday in August 2012.

Ongley says retail property in prime locations such as Queen St is in constant demand from investors.

Davies says the area has always had a very good leasing history. "There is very little vacancy along lower Queen St. Most of the retail units have been continuously occupied for a long time and they are prized investments.

"Demand for investment property on Queen St is expected to increase with the CBD's growing population as well as increasing tourist numbers and growth in the two CBD university campuses. For this reason, Queen St retail properties, especially in the prime location at the bottom end of the street, are viewed as highly strategic investment holdings."

colliers.co.nz/21135