Big Save Furniture, Smart Marine and Reece Plumbing are tenants in a large bulk retail property in Manukau which has been placed on the market for auction sale.
85 Cavendish Dr, Auckland, is being marketed by Charlie Oscroft, Leroy Wolland and Gareth Fraser of Colliers International. It is due to go under the hammer at 11am on November 18 at 151 Queen St, Auckland, unless it is sold before auction day.
The fully-occupied building is on a highly prominent 1.1ha site opposite the Manukau Supa Centa, which is one of New Zealand’s largest dedicated large-format retail centres, says Oscroft.
“This spot in central Manukau, in a well-established bulk retail precinct that is known to many people as a convenient retail destination, is hard to beat as an investment location. Several major retailers have a presence here, including Spotlight, Mitre 10 Mega, Bunnings, Harvey Norman and Kmart.”
The centre’s position on a busy arterial road means it captures a steady flow of customers and has very low vacancy levels, Oscroft says. “Add in the large land holding, functional building and three national and international-brand tenants, and you have a very attractive set of investment fundamentals.”
The property has wide frontage and dual access points to Cavendish Drive, which is the main arterial road linking the south eastern suburbs with Auckland International Airport. It was recently widened to four lanes and carries approximately 35,000 cars a day.
Limited opportunities to develop further bulk retail properties in the area increase the property’s scarcity value, says Wolland. “Retail vacancy rates in Manukau are low, a reflection of the limited land supply and strategic location near motorways and surrounded by a large residential catchment. These factors mean the property will be a sought-after addition to many investors’ portfolios.”
The split-risk characteristics of the asset will be a further drawcard, says Fraser. “Multi-tenanted investments like this one are always popular, owing to their diversified cash flow and reduced income risk if a vacancy arises.”
The property’s strong fundamentals, as well as the continuing popularity of retail properties in general among investors, means the agents are expecting a busy auction room. “This will potentially be one of the biggest commercial auctions seen in the country this year,” Fraser says.
Colliers International’s 2015 New Zealand retail property market report, released last month, shows that demand for retail space in Auckland CBD, the suburbs and shopping centres is very high. Vacancy rates are down across the whole city, with retail spending driven by rising house prices and real wage growth. “Manukau in particular demonstrates very low retail vacancy levels historically,” says Wolland.
While developers have upped the ante to satisfy demand, pressure remains for rents to rise, the report states. Retail yields also have room to firm in the current cycle despite approaching historical lows.
“The positive factors operating in the retail market, along with the straightforward and easy-to-understand nature of the asset class, means the property should be in high demand,” says Wolland.
He says the property, which was significantly upgraded and refurbished in 2007, makes an ideal low-maintenance holding. “The building has a Grade A standard seismic rating and is in good condition, serving the tenants very well with open floor space, plenty of car parking and good access for deliveries. It is a very functional and easily-lettable property.”
The building provides 3893sq m of floor space with additional canopied loading areas and 162 off-street car parks. A large yard provides room for truck movements to supply the businesses.
Big Save Furniture has occupied the property since January 2008 and has recently demonstrated its long term commitment to the location by extending its lease through to 2020, says Oscroft. The New Zealand family-owned and operated company has 23 stores around the country, employing around 350 people.
Reece Plumbing is a major Australian publicly-listed company with 360 stores and over 3000 staff. It entered the New Zealand market in 2006 and has eight stores in Auckland. The business has operated at the property since December 2007 and holds a lease extending to 2021.
The newest tenant, Smart Marine, is another family-owned New Zealand business. It is due to open its new store in the building in November, which will be the company’s fourth outlet. The business has signed a new 12-year lease.
The three tenancies generate total net contract income of $714,436 a year and provide a weighted average lease term (WALT) of 6.7 years.
The property is within one kilometre of the Southern and South Western Motorways, says Oscroft. “Excellent motorway access has helped Manukau become one of the most sought after commercial areas in Auckland, with many leading companies now having a presence here. Retail, commercial and industrial operations combine here to create a well-rounded mix of occupiers and a full-service town centre serving the surrounding large and growing population.”