Strong tenant covenant strengthens significant landholding

A huge industrial offering - with a new triple-net long term lease to a long-established international tenant -  in what the Government calls the “engine room of New Zealand’s industrial and manufacturing economy” has come to market for the first time in nearly 60 years.

The 27,045 sqm property - split over two titles with buildings spanning 8,338 sqm - at 319-323 Church Street, Penrose is for sale by deadline private treaty closing 4pm, Wednesday 16 March, unless sold prior.

Paul Higgins of Colliers International who, with colleague Hamish West, is marketing the property, says the terms of the lease and size of the land make it an ideal passive, bottom-drawer investment opportunity.

“This property encompasses a significant landholding in in one of New Zealand’s most sought-after industrial precincts, with a strong tenant covenant that includes a new 20-year triple-net lease - whereby the tenant is required to keep premises both weathertight and structurally sound.

“Triple-net leases are not overly common in New Zealand but the benefits to them are clear - owners can be confident of a quality, passive commercial investment that could possibly extend for generations to come,” Higgins says.

The tenant - New Zealand Starch Ltd - has occupied the property for nearly 60 years and has signed an initial lease of 20 years from settlement - returning $1,130,165 net annually plus GST and operating expenses, with rights of renewal at 15 and 10 years.

“The lease terms also provide for good structured growth, further strengthening this property as a long-term, no-hassle investment opportunity where investors can sit back and effectively watch the cheques come in.”

NZ Starch is the only producer of maize starch and glucose products in New Zealand, Higgins says.

“With a history dating back to 1939 in Christchurch, NZ Starch is no newcomer to the marketplace. The company has grown to become the leading provider of maize-based products to the domestic market, and also an important supplier to the global market - currently exporting to Australia, the South Pacific, Asia, Europe and America, with distribution warehouses in Sydney, Melbourne and Brisbane.”

The property

The property comprises a variety of buildings constructed between the 1950s and 2015, including specialised processing and production structures, offices, warehouses and storage facilities, Higgins says.

“NZ Starch has grown into the site since the 1950s - and the buildings reflect that - with much more scope to expand further. Much of the site is concrete and asphalt-sealed car parking, yard and manoeuvring areas.”

Centrally located towards the northern boundary of the site is the large No. 1 Store - constructed in the late 1950s - which has since been extended to include a warehouse, office/laboratory, engineering workshop,  mezzanine storage, lunchroom/canteen and specialist processing rooms.

The building is constructed of concrete foundations and floor slabs, panels with profiled metal, fibre-cement exterior walls and a profiled metal/corrugated roof on a steel and timber structural frame with translucent roof panels.

To the front of the site is a modern-looking building known as the No. 2 Store. The clear-span warehouse structure - with a stud height of 5.5m at the portal knee to 6.5m at the apex - is constructed of concrete foundations and floor slabs, concrete block walls and a profiled metal roof on a steel structural frame with translucent roof panels.

Adjoining the eastern wall is a small lean-to shed made of concrete block and profiled metal. Located to the rear of the site is a building used for grain receiving.

Situated behind the No. 1 Store and main offices are several specialist buildings - constructed between the 1960s and 1970s - including the glucose refinery, corn mill feed house, feed silo building and buildings housing glucose, corn oil extract and large tanks.

To the west of the site is the No. 3 Store - a three-level structure of similar construction to the No. 1 Store and houses a number of tanks, warehouse accommodation and a single-level office.

To the east of the No. 3 Store is a modern, clear-span high-stud warehouse, constructed last year to cover several existing and new silos.


A key drawcard to this property is its location - on the southern side of Church St, approximately 2km west of the South Eastern interchange to State Highway 1, says West.

“Penrose’s popularity can be attributed to its ease of access to State Highway 1, its relatively short distance from the CBD, good access to the Airport via SH20 and its close proximity to the nearby labour pools of Onehunga, Mt Wellington, Ellerslie, and Greenlane.

“This accessibility makes it an industrial hotspot for tenants, owner occupiers and investors, and vacancy rates extremely low. This is placing upward pressure on rents in the area, which will likely give the property’s new owner the opportunity to increase their income in the future.”

The size of the landholding - 2.7 hectares highly sought-after Business 6 land right in the middle of Penrose - is a really distinctive offering, West says.

“The Church St area has also undergone significant revitalisation in recent years, with an increase of higher-end offices and showrooms in the area. The ongoing rejuvenation of this area further cements this offering as a valuable long-term investment.”

Currently zoned under the District Plan as a ‘Business 6’, the Proposed Auckland Unitary Plan (PAUP) classifies the site as ‘Heavy Industry’, providing for industrial activities that may produce objectionable odour, dust and noise emissions.

The Penrose area is also tipped to improve further following the Government’s announcement last month of its intention to streamline the consent process for the $1.85 billion East-West Connection roading project, running to the south of 319-323 Church Street, which will provide a seamless link between the South-Western Motorway (SH20) and the Southern Motorway (SH1).

“The Onehunga-Penrose area is the engine room of New Zealand’s industrial and manufacturing economy and along with East Tamaki and Auckland Airport employs over 130,000 people and generates $10 billion a year in GDP,” Transport Minister Simon Bridges says.

“Subject to approval, it’s the Government’s intention to fund the East-West Connection through the Land Transport Fund so construction can start as early as 2018.”

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