The land and buildings housing a major supermarket on a long lease in one of New Zealand’s wealthiest suburban catchments has been placed on the market for sale.
The freestanding Countdown supermarket at 271 Richmond Road, Grey Lynn, sits on more than 1.1 hectares of some of New Zealand’s most valuable residential and general business-zoned land.
The freehold site is fully leased to General Distributors Ltd, a subsidiary of Woolworths Group, trading as Countdown. With over 215,000 staff and AUD63 billion in sales last year, Woolworths is the largest retail group in Australasia.
Its tenancy at the Richmond Road site generates net annual rental income of $1.5 million plus outgoings and GST on a lease that extends to 2031, with a further six-year right of renewal. The lease includes built-in three-yearly market rental reviews.
Now on the market for the first time in over 11 years, the Grey Lynn site is being billed as a commercial property investment opportunity of a calibre rarely presented to the open market.
Colliers’ Capital Markets team has been exclusively appointed to market Countdown Grey Lynn, Auckland, for sale by private treaty closing at 4pm on Thursday 22 April.
Jason Seymour, Capital Markets Director at Colliers, says the Richmond Road site’s impressive investment credentials are bolstered by enormous future development potential.
“The property currently benefits from substantial long-term rental income. But rapidly appreciating land values over the past few years have created a rare situation where the current value of the investment is closely aligned to current land value.
“This creates significant potential value at the expiry of the lease – at which time owners can consider full redevelopment of the site for potentially higher value residential and commercial uses.
“This is an outstanding opportunity to invest into one of New Zealand’s most coveted asset classes, fully-leased to a blue chip, essential services tenant. With its long-term development possibilities, this will make 271 Richmond Road an exceptional cornerstone investment for any portfolio focused on long-term value creation,” says Seymour.
Richard Kirke, Capital Markets Director at Colliers, says the property for sale consists of a modern supermarket building with a net lettable area of some 4,374sq m, plus a 241sq m canopy, on approximately 11,200sq m of land across six freehold titles.
“The site encompasses a substantial supermarket with associated warehouse storage, mezzanine offices, staff amenities and cafeteria. Originally constructed in 1979, the building was renovated in 1998 and subsequently reconfigured. It underwent a substantial internal and external refurbishment as part of the 2019 lease renewal ensuring it is today a modern and inviting supermarket.
“Adding further comfort to the new owner is part of the lease renewal variation agreed in 2019/2020 required an extensive store refurbishment to upgrade the store to the more modern format Countdown store.”
The comprehensive updates included upgrades to the checkouts, produce, bakery, deli, seafood, alcohol, office and pharmacy sections, a new click and collect zone, upgrades to the foyer, lobby and bathrooms, new ceiling and LED lightning, extensive upgrades to electrical, communication, security and PA systems, repaired the roof as well as modifications and refurbishment of the mechanical
services including back of house air-conditioning, retail diffuser refurbishment and ducting fresh air and extract systems were updated.
The property underwent a detailed seismic assessment for seismic performance in 2015 and was rated A+ or in excess of 100% of new building standard.
The site also incorporates some 168 external car parks, plus 35 more in the basement, along with service areas and readily accessed via the main vehicle and pedestrian entrance on Richmond Road.
“The balance of the land for sale sits within the Residential – Terrace Housing and Apartment Buildings zone, which supports residential intensification through multi-unit developments of up to five, six or seven storeys in identified height variation areas.”
“Roughly half of the site is zoned Business – General Business under the Auckland Unitary Plan, which provides for a number of business activities, from light industrial to offices and trade supplies. Importantly, the zone also permits large format retail which is extremely rare in inner city suburbs like Grey Lynn.
“The supermarket anchors an established and popular commercial precinct which includes cafes, homeware and design stores, along with well-known brands such as Mitre 10, Farro Fresh and Jetts Gym,” says Kirke.
The property is prominently situated on Richmond Road, a main arterial linking the suburbs of Grey Lynn and Ponsonby.
In discussing the property’s location, Seymour notes that Grey Lynn is a highly accessible suburb, handy to the Western Motorway and Auckland’s public transport network and a mere 3.5km from New Zealand’s global city.
“The site for sale lies in the heart of Auckland’s immensely popular and affluent inner-city western suburbs, which also include Ponsonby and Westmere – as well as Herne Bay, New Zealand’s only suburb where average house values exceed $3 million.
The Countdown Grey Lynn property is expected to attract keen interest from commercial property investors seeking prime assets of the highest quality.
Seymore says, “for potential buyers, this property presents a very simple and passive management proposition, with a single tenant and the majority of outgoings billed directly to the tenant.
“The supermarket sector is a proven essential-service performer, trading robustly even through the challenges presented by the Covid-19 pandemic. Combined with a prime tenant covenant, this will provide confidence about ongoing financial performance.”