Sub-$1m Albany units could suit small investors

Two adjoining units in Albany will be auctioned by Bayleys on April 9.

Two adjoining modern office units in Albany serving as the head office of Star Metro Holdings, which operates 48 outlets under the FIX convenience store, Caltex and Subway brands, will be auctioned next month.

The units on the first floor of Building B at 17 Corinthian Drive are held in different ownership structures and will be offered separately with leases to Star Metro Holdings as part of Bayleys' Total Property auction on Wednesday April 9, unless sold before that date. Stephen Scott of Bayleys Auckland, who is marketing the property with Alex Strever of Bayleys North Shore Commercial, says an investor wanting to buy both units could negotiate to do so before the auction.

The units are part of the five building Corinthian Drive office park built by Fletcher Construction in the early 2000s. Scott says they have road front exposure to the Albany Expressway and are close to the Albany Mega Centre.

Unit B3 has 179sq m of office space and five car parks and is producing net annual income of $47,670. Unit B4 has 227sq m plus seven car parks and is rented for $61,310 a year net.

"This puts them in the popular under-$1 million price bracket and offers smaller investors affordable access to the office market, which is in a strong recovery phase at the moment," says Scott.

Both units are being sold with an initial two-and-a-half year lease term to Star Metro Holdings but with rights of renewal until late 2021.

The company operates FIX, Caltex and Subway stores in Northland, Auckland, Wellington and the Bay of Plenty and manages group procurement and promotional functions for a further 100 Caltex retailers nationwide

Star Metro Holdings bought 12 Caltex Star Mart stores in the Auckland and Wellington central business districts from Chevron in 2009 and rebranded them as FIX convenience stores with new fit-outs. The FIX convenience brand is in the process of being rolled out under licence to 100 larger Caltex retailers nationally.

Strever says there has been a strong take up of vacant office space in Albany over the past year by both tenants and owner-occupiers, with the latter taking advantage of low interest rates to "borrow to buy" premises.

"Smaller, part floor units have been particularly popular with both these groups of purchasers to the point where there is now very little good quality empty space available in this sector of the market. This is putting upward pressure on rentals."

The latest overview of the North Shore office market by Bayleys Research shows total occupancy levels improved considerably in 2013, with vacancy rates now at their lowest level since 2006. In particular, the vacancy rate for office space in Albany fell from 11.4 per cent at the start of 2013 to 7.6 per cent in early 2014.

"There had been a big vacancy hangover from a long construction tail of speculative development in the North Shore's newest office suburbs of Albany, Mairangi Bay and Rosedale that built up just prior to and during the global financial crisis," says research analyst Sarah Davidson.