Shore City is a subregional shopping centre occupying almost an entire block on a large landholding of 1.26 ha that generates approximately $7.4 million in total net annual rental income. It is anchored by the nationwide tenant Farmers department store and includes several well-known Australasian retail outlets.
The freehold property at 52 Anzac Street, Takapuna, is being marketed for sale by international private treaty closing 1600 on September 10 by Andrew Reed and John Goddard of Colliers International and Carl Molony and Philip Garland of Stonebridge Property Group.
The shopping centre has a net lettable area of 13,990sqm over two levels of enclosed retail with 73 tenancies, together with parking facilities for 830 vehicles on an adjoining seven level multi-storey carpark.
The property is 98 per cent leased by area, with more than 46 per cent of the centre’s leases not expiring until 2019.
Reed says very few subregional shopping centres get offered for sale in Auckland, and thinks this will be one of New Zealand’s premium retail investment opportunities for 2015.
“Shore City has performed well with strong tenant retention rates, and it has experienced significant interest from new retail brands wanting to join the centre. Takapuna is also an area targeted for major intensification, and Shore City is very well placed to take advantage of that for its new owners.
“Retail as a property investment class is well positioned in Auckland to benefit from the positive growth projections, and Shore City is already heavily supported by its local community within an affluent catchment area that has one of the fastest growing population projections in NZ.”
Reed says large scale investments like this remain a key focus for domestic and international investors, especially with NZ’s continuing strong economic projections.
“Over the past three years, global investors have started to focus heavily on NZ as an investment location.
“Among offshore groups investing more than $5 million in NZ last year, the total value of transactions exceeded three billion NZ dollars. This was an eightfold increase over the previous year, and a level not seen since 2007.”
Reed says that, significantly, more than 60 per cent of these transactions, by value, involved new market entrants.
“Traditionally, NZ has not been on their radar. The focus was Australia.
“However, overseas buyers now view NZ as a market providing them with not just targeted returns, but also very appealing, transparent legal and tax structures.
“Although private, offshore investors have been active in NZ since the 1980s, the recent, rapid increase in activity has come off the back of the weight of capital coming from international groups – particularly out of Asia.”
Molony says over and above the property’s exceptional fundamentals as a retail investment opportunity, it also presents solid potential for redevelopment.
“Prospective owners could consider reconfiguring the centre, adding more gross floor area (GFA) or potentially incorporating residential onto the site – subject to further planning work under the proposed Auckland Unitary Plan.
“Should the draft Takapuna Plan be adopted, Shore City is well positioned to benefit from increased planning controls for height and floor space ratio, creating the possibility for a mixed-use redevelopment.
“With the shopping centre occupying the majority of a unique island-type site and having a flexible lease expiry profile, it offers a strong holding income for developers to unlock a highly desirable mixed-use scheme over the short to medium term.”
Alternatively, Molony says Shore City has the flexibility to attract a very diverse range of retail-focused investors, both locally and offshore.
“With a long established, largely national, tenancy mix as well as being positioned within a strategic, strong socio-economic area, incoming investors have countless options to nurture existing tenancy renewals or undertake a wholesale repositioning of the asset.
“The addition of a high quality, fresh food or casual dining precinct to the centre is considered a particularly outstanding opportunity that would complement other recent initiatives within the Takapuna central business district.”
Molony says, either way, the centre offers an ideal, long-term, income-generating investment.
Prospective buyers can also take confidence from the level of demand for retail space in Auckland, says Goddard.
“The Auckland region’s current 2.4 per cent vacancy rate is the lowest since 2007. Auckland shopping centres are also continuing their strong run, with less than one per cent vacancy out of more than a million sqm of space.
“Auckland is NZ’s largest city with a population of 1.5 million people. By 2040 it is forecast that another one million people will live there, accounting for 45 per cent of the country’s population.
“The city makes up 35 per cent of NZ’s GDP and is unique in the world in its scale to the national economy. Auckland’s GDP is growing at 2.9 per annum, and this growth is creating new investment opportunities in a range of sectors.”
Statistics NZ’s latest retail spending data also shows Auckland’s share of retail spend is continuing to grow, says Goddard.
“The city’s retail sector is currently benefitting from the wealth accumulating through record high migration, strong labour conditions and a rising housing market in a low interest rate environment.”
The property is located in the heart of Takapuna, very close to major arterials and transport links and approximately just a 10 minute drive to the Auckland CBD.
“Takapuna boasts one of the highest pedestrian counts on the North Shore and is an extremely desirable and popular Auckland coastal location,” says Goddard.
“The newly amalgamated Auckland Council has made clear that its future intention for Auckland metropolitan areas from a planning perspective is intensification of land uses in key growth nodes, focused around transport.
“Takapuna, as an affluent inner suburb and a highly desirable residential location with strong transport and road access links to Auckland CBD, is well placed to benefit from such a strategy in terms of intensification of land.”
Goddard says demand has outstripped supply in Takapuna for some time, and vacancy is at an all-time low because people choose to live and work there, balancing business with a great lifestyle.
Surrounding developments include multiple, well-established retail and office developments drawing increasing customer numbers to the area.
“The beachside commercial centre provides a wide variety of boutique shops, indoor and outdoor theatre and dining options with more than 50 bars, cafes and restaurants,” says Goddard.
“The Takapuna Beach Business Association is also driving redevelopment projects which continue to attract quality tenants and the establishment of destination stores. With a mission statement of ensuring that Takapuna Beach becomes the preferred location in the Auckland region to live, work and play, the association is involved in a variety of activities, including marketing, promotions, advocacy, and events.”
Initiatives like the Takapuna night market, outdoor theatre, sponsorship of events and continuing local area upgrade projects are injecting life and resurrecting Takapuna as a vibrant business, retail and residential centre.