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A 1.2ha Mt Wellington property housing the Auckland headquarters of FloraMax, the flower division of Turners & Growers Fresh Ltd, has been placed on the market for sale by auction.

3 Monahan Rd, Auckland is being marketed by Andrew Hooper, Greg Goldfinch and Todd Kuzmich of Colliers International. It is due to go under the hammer at 11am on November 21 at 151 Queen St, unless it is sold by private treaty before the auction date.

With the property’s proven growth location, a 12-year lease returning $600,000 in net annual rental income and three-yearly market rent reviews providing the potential for income growth, all the makings of a top quality commercial property investment are in place, says Hooper.

“This is sensational investment stock offering all the fundamentals investors are looking for: a long lease, strong tenant covenant, prime location and a solid and growing income stream,” he says. “There is significant undersupply of quality tenanted industrial investments on offer right now so this is very exciting for the investment market.”

This restricted supply, combined with high demand from investors for quality, tenanted industrial properties given continued low interest rate levels, means a high level of interest from the market is expected for such a great offering, Goldfinch says.

“There is a lot of investment money looking for a home at the moment, and as such we expect to receive enquiries from passive buyers right across the board including private investors, institutions and syndicators,” he says.

Hooper cites the large number of offers received for both large and small investment properties recently, including The Warehouse’s North Island distribution centre at Wiri, which sold to ACC for $90m; and 7 Monahan Rd, which is also leased to Turners & Growers and which sold under the hammer for $3.95m to an owner occupier.

The 6600sq m property sits on a regular-shaped 1.2ha site and includes office, trade retail, warehouse and canopy areas.

Stuart Clark, property and asset manager at Turners & Growers Fresh Ltd, says the move to sell 3 Monahan Rd is part of a rationalisation of the company’s property portfolio following its change in ownership.

Tenant

FloraMax is a “fascinating business” and the dominant player in the flower market in New Zealand, Clark says. “The Monahan Rd facility houses a large auditorium where stock is sold under one of the world’s most advanced, state-of-the-art Dutch clock auction systems.”

Under the Dutch auction system, the auctioneer begins with a high asking price which is lowered until a bidder accepts the price and wins the auction. This type of auction is convenient when it is important to sell goods quickly, as a sale never requires more than one bid.

FloraMax is responsible for auctioning the majority of all flowers sold in New Zealand and has auction houses in Auckland, Wellington and Christchurch, with its wholesale partners based on-site at the auction premises. Its Monahan Rd facility was opened in May 2000.

Location

The property is located on Business 5-zoned land in the centre of one of Auckland’s longest-established and most sought-after industrial areas, says Kuzmich. “Monahan Road is a cul-de-sac which originates from the roundabout at the eastern end of Vestey Drive, which is known as Mt Wellington’s ‘dress circle’ address.”

He says parts Mt Wellington have been undergoing a transformation from a traditional industrial area to more retail/trade uses, which gives rise to future redevelopment potential at 3 Monahan Rd. “There is definitely the potential for intensification of the property in order to add further value at a later date.”

Kuzmich says Mt Wellington is considered one of Auckland’s premier industrial areas, with excellent access to the motorway system and a central location within greater Auckland only 12 minutes’ drive from the CBD. “The area is highly desirable among occupiers, with a number of major industrial developments accommodating both multi‐national and national occupants commanding some of the top industrial rentals in the Auckland market.”

The property is located very close to Mt Wellington Highway which leads straight to the shopping and cafes of the Sylvia Park commercial hub, Goldfinch says. On and off ramps to the Southern Motorway are also in very close proximity.

“Mt Wellington is also in demand by importers and distributors due to its central location halfway between Auckland’s CBD and port and Auckland International Airport,” Hooper says. “It is a very tightly-held area with a short supply of properties and very limited land availability, so those properties that do come onto the market generally get snapped up very quickly.”

Recent research from Colliers International shows prime capital values in the Mt Wellington industrial market are expected to increase by 3.5% over the year to March 2013. Prime rentals are expected to increase by 3.3% over the same period.

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