Retail outlets on the shopping list for property investors

Retail and hospitality premises in two high profile Auckland locations are going under the auctioneer’s hammer later this month.

The sites are in Newmarket’s Rialto Centre, and the Pacific Square Retail Plaza in Manukau -adjacent to the Pacific Events Centre.

At the Rialto Centre, 11 freehold retail premises are going up for auction, with a further two units being marketed by negotiation. Meanwhile in Manukau, 10 premises are being sold off.

The marketing and sale of premises at both venues has been coordinated by leading real estate agency Bayleys, with the auctions taking place at the company’s Auckland central auction room on March 30.

The Rialto sell-off follows the strong interest and demand from investors last year for the first release of units in the boutique retail centre in the heart of Newmarket’s retail precinct. Seven premises put up for auction then all sold under the hammer at prices ranging from $366,000 to $2.418million.
Bayleys Auckland salesman James Chan who is managing the second stage release of strata titled units in the Rialto Centre on behalf of Ladstone Developments Limited, says eight of the properties being auctioned have a net annual rental income of $50,000 or less - making them highly attractive to smaller investors and family trusts.

The smallest units for sale are the 24 square metre Le Salon Black hairdressing salon producing net annual rental income of more than $9,000, a Westpac-leased ATM machine producing net annual rental income of $9,667, and a 10 square metre highly-visible all-glass kiosk occupied by Rialto Florist delivering annual rental of $17,026.

At the other end of the scale, three Rialto premises for sale on the favoured western side of Broadway are occupied by well known tenants – including ANZ Bank, Bendon, and Eurostyle. Other premises for sale include units occupied by food operator Nando’s, a café/bookstore, and skin surgeon.

Meanwhile in Manukau, the Pacific Retail Plaza development built in the mid-2000s to coincide with the opening of the neighbouring Pacific Events Centre, is being sold off. The premises are owned by a private property investment company which has obtained separate unit titles for each of the 10 shops, and is now offering them for sale individually.

The units are located in four free-standing buildings on a 1.049 hectare site with substantial parking available in front of the shops and in the basement of one of the buildings. Bayleys salesman Robert Platt who is managing the sale of the units, says the centre provides a high standard of modern retail accommodation and has a good mix of major brand and local tenants. They have lease terms ranging from five to 15 years.

The properties for sale include a number of food tenancies - including national and international chains Dominos Pizza, Subway, and Jesters Pies, at net annual rentals of $41,185, $35,736 and $28,380 respectively. Also for sale are premises occupied by national chain Super Liquor which has a six year lease, and a 46 square metre tobacconist outlet which has annual rental of $25,000.

Two restaurants and bars are also included in the Manakau sale. The Lonestar Restaurant has been in occupation since the complex opened in 2006 and has a 15-year lease running until 2021, while O’Ryans Irish Tavern has a ten year lease from May last year - with a current net annual rental of $144,000.

Robert Platt says retail property has been the strongest performing sector of the investment property market over the last three years, with well located and tenanted properties holding their value despite the downturn in the market.

“There has been particularly strong demand for properties in the sub-$1million investment sector of the market, which is the price range that most of the Pacific Square offerings are in.”