A leased commercial property on a high-profile corner site on the fringe of Wellington’s main entertainment precinct Courtenay Place has come to the market for sale for the first time in more than 30 years.

The 450sqm single level large format retail/warehouse building at 26 Kent Terrace, Mount Victoria was constructed in 1992 by Auckland-based company Mace Development, with engineering by Dunning Thornton, for the Lion Group-owned Super Liquor outlet.

It is now occupied by Big Barrel Group Limited, also trading as a liquor store, and returns annual net income of $176,280.75 plus GST, with a market rent review due 1st October 2024.

The current lease includes a redevelopment clause, allowing an owner to give six months’ notice to terminate the lease any time from 1 October 2026. There are identified advantages inherent in the property’s City Centre zoning, which allows for flexible redevelopment up to 28.5m.

This 973sqm site has three frontages giving profile to Kent and Elizabeth Streets and Edge Hill, and has a large sealed yard to the front of the property for car parking and streamlined delivery movements.

Andrew Smith and Mark Sherlock, Bayleys Wellington Commercial are marketing the property by tender, closing 11th September.

Given the location and the triple-profile, north-facing site, Smith says it is no surprise that the vendors have had numerous approaches by keen buyers in their three decades of ownership.

“This is the crown jewel in the vendors’ portfolio and was always seen as a long-term hold,” he says.

“Now, after 32 years, it is for sale on the open market as the vendors divest some of their investment property assets to release some capital.”

Smith says while the existing established tenant is trading well from the site and the lease does include some renewals, the redevelopment clause that comes into play from October 2026 is significant given the favourable zoning overlay and the potential it holds to optimise the site’s coverage.

“It’s actually quite unusual for a redevelopment site to have a committed tenant, a favourable lease structure and a good rental return. The location clearly works well for the Big Barrel retail operation with onsite carparking and easy dual access off Elizabeth Street and Edge Hill.

“But frankly, the site is fundamentally underutilised with its best and highest use likely to be a multi-unit high-rise residential development.

“The viable holding income would keep things ticking over while a new owner waited for construction and debt market fundamentals to improve, and to provide a buffer while formulating future plans for the site.

“With more than two-years to run until the redevelopment clause can be activated, it’s probably good timing for the development sector as the economy should start to rally off the back of the Reserve Bank’s more dovish tone, further expected cuts to the OCR, and a more palatable inflation rate.”

Agents have had some “early nibbles” from interested parties since launching the property to the market – from both owner-occupiers in the liquor and vehicle sales’ sectors looking to buy the property to continue utilising it as a retail premises, and developers who recognise the credentials the site holds.

“The first enquiry was from an Auckland developer, which shows there is some confidence returning to the market and that this location – between the CBD and the town belt – has pulling power,” says Smith.

“There is a well-documented shortage of residential housing in the capital and there are several examples of successful apartment developments in the immediate area, with the new Gibbons Co. multi-unit complex across the road at 30 Kent Terrace being a good example.”

Click here for more information on the listing.