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Auckland

Double dip investment opportunity on city fringe

JLL is marketing a freehold site with long-term development potential


 

 

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617 New North Rd 19 small.jpgJLL is marketing 617 New North Road in Morningside. 

The 943 sq m freehold site includes two buildings and six carparks. The buildings make up a combined 505 sq m of floor area. The property also has two street frontages – one on New North Road and another on Western Springs Road – offering both flexibility and visibility. 

JLL agents Alex Wefers and Jarred Hill are marketing the site, which is for sale through an expression of interest campaign, closing on 28 April.

The buildings are currently leased to two different tenants, bringing in an annual net return of $108,398. Both leases have final expiry dates in 2024. 

Café Peel to Pip occupies a timber clad villa-style building at the front of the property. This building also includes a two-bedroom apartment, which is occupied by the café tenants. Peel to Pip is a popular local café that is operated with a sustainable ethos. It focuses on serving ethically-sourced dishes in its sun-filled dining area. 

The café is on a three-year lease from September 2015 with two rights of renewal of three years each. 

The rear building, which is located at 6A Western Springs Road, is made from timber framing and brick cladding. It is tenanted by Unite, a workers’ union, which has occupied the building for more than 10 years. The union advocates for employees working in industries such as hospitality, entertainment, healthcare and retail. Unite’s lease runs for 10 years from March 2014 with no rights of renewal.

Wefers says that the property’s two income streams give buyers a split-risk investment opportunity. 

“Income from two established tenants make this a secure investment,” says Wefers. “Both lease agreements provide fixed growth with biannual rent reviews that are linked to the Consumer Price Index and a minimum 2 per cent increase.”

Hill adds that the property also has redevelopment potential in the future, once the leases expire in 2024. 

“The property has favourable zoning under the Unitary Plan. It falls under the local centre business zone, which allows for a mix of retail, office, food, beverage, apartments and commercial services. Developers may build up to 18 m in this zone,” Hill says. 

Hill also notes that city fringe locations such as 617 New North Road are consistently popular with tenants, investors and developers alike. 

“The property is strategically located with excellent access to transport links, local retail, and food and beverage amenities,” says Hill. “It is around 1.2 km to the North-Western motorway system, a 12-minute walk from Kingsland village, and only a few minutes’ walk to Morningside railway station. Access will only improve once the City Rail Link upgrade is complete.” 

“The local area is undergoing significant development and population growth,” Wefers says. “A new apartment complex is planned for 580 New North Road, while a craft brewery is due to open at 597 New North Road by the end of April.” 

Population forecasts by Statistics New Zealand indicate that the resident population will increase by 13,000 between 2016 and 2043, which equates to a 32.1 per cent boost. 

“This rise will only add value to this fantastic property,” Wefers says.