'Pumping' petrol station fuels potential commercial property investment

A high-profile Mobil service station with multi-purpose warehouse/workshop units in Auckland’s desirable city fringe has been placed on the market for sale.

The two level development, which is only a few years old, is on Auckland’s busy Mount Eden Road just metres from the village. It is on a freehold property of some 2952 square metres comprising four strata freehold titles and has four main tenancies.

A family trust has owned this property for more than 25 years, and has chosen Bayleys Real Estate to market the property through an international tender process that closes on 24 November.

Prospective purchasers have the choice of tendering for either the whole property with all four strata titles, or just the Mobil Service Station on its own, with the three remaining titles being retained by the current owner.

Bayleys sales consultant Mike Adams said “Mobil Oil New Zealand Limited is the anchor tenant and is a subsidiary of Exxon Mobil Corporation, which is one of the largest and most profitable companies in the world according to Forbes 500. It is hard to think of another available property that offers this sort of profile and security”.

Mr Adams continued “Mobil has provided fuel from this location for over 70 years, and occupies the street level part of the complex with a nine year lease running through until 31 December 2017”.

Three other companies operate from the high-stud, multi-purpose warehouse/workshop units on the lower level, which are accessed directly from Mount Eden Road by a drive through configuration.

There are two automotive service companies: Midas New Zealand and Eden Tyres. They both have 10 year leases terminating on the same day as the Mobil lease, while the last unit is occupied by international components supplier Honeywell Ltd with a lease until 30 November 2011. This fully leased property has over 40 car parks and produces a net annual income in excess of $833,000.

A major redevelopment of the site was completed in 2006 – creating a New Generation Mobil Service Station with an ‘On the Run’ café to capitalise on the trend of expanding retail offerings to the fundamental purchase of fuel.

Mr Adams said the evolution of 496-502 Mount Eden Road as specialist commercial destination, had been undertaken strategically – with the landlord primarily targeting same-sector businesses, which has created an ‘automotive hub’ concept while allowing flexibility for future use changes.

The current operators on site have a marked advantage of having little in the way of local competition. For example, the closest competing service station is in Balmoral, approximately 1.5kilomtetres away.

The three lower level units have five metre stud heights that allow for their offices and amenities to be split over two levels to maximise the useable workshop space. Mr Adams said that the three long-term tenancies have rent review mechanisms tied into their lease contracts – with each of them being reviewed early in January next year.

“The three basement workshops have a high degree of flexibility built into their design – with partitioning which can be easily removed to facilitate the amalgamation of two or three units into one if required at some stage in the future,” Mr Adams said.

Maximum site coverage and efficiency has been achieved through the use of a generous drive-through to the lower level tenancies, accessed from the site’s huge 61 metre road frontage. The lower level inter-tenancy walls are a tilt slab construction with extensive air extraction systems and motorised roller doors.
The surrounding Mt Eden neighbourhood features a mixed-use array of properties and businesses – including retail, hospitality, commercial offices, a medical centre, and residential housing.

“Tenant quality, long term leases, large prime city fringe land-holding, near new buildings... this investment ticks all the boxes and more,” Mr Adams concluded.