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Anchor tenant in main street commercial offers steady footing for investors

A tenanted investment on one of Rotorua’s busiest retail strips is anchored by an NZX-listed multinational retailer, offering consistency and stability for investors, Bayleys salespeople say.

The freehold unit titled premises spans 835sq m (more or less) at 1266 Tutanekai Street, in a prime position featuring frontage to the busy road front that forms the spine of Rotorua’s inner city, linking the retail and business trade areas to Lake Rotorua.

Bayleys salesperson Brei King says that while the outlook for 2024 is one of more challenging trading conditions and financial discipline for households, the subject property presents an attractive hedge against inflation.

“Commercial real estate in prime areas remains resilient, particularly those with strong tenant covenants and the capacity to increase rental income, which is a critical drawcard for investors.

“The subject property presents an opportunity anchored by an established tenant whose size, reputation as one of the leading retailers in its market group, and status on the New Zealand Stock Exchange provide confidence in a steady and reliable rental return.

“Additionally, the development pipeline has largely paused until some of the core economic fundamentals return, fuelling demand for existing retail assets and increasing the potential for future rental growth for properties positioned to benefit from the pedestrianisation of the city centre.”

King is marketing the property for sale by auction with colleagues Mark Slade and Damien Keenan, scheduled at 2:00 pm on Tuesday, 23rd April 2024 (unless sold prior).

Positioned in a busy block with other national brand neighbours, including shoe shop Hannahs, jewellery retailer Pascoes, and sporting goods store Stirling Sports, the unit has benefitted from extensive tenant-led renovations.

“The property has been fully remodelled by the majority tenant and presents as a modern, open storefront and showroom, with gabled ceilings, polished concrete flooring and a wide checkout area,” says Bayleys Rotorua salesperson Mark Slade.

“There are also office facilities and staff amenities, including a break-out room and rear access to the warehouse via a high-stud roller door.

“The property features a seismic assessment of 68 percent of New Building Standard and an attractive street profile with shared parking out front.”

Leading outdoor and adventure goods retailer Kathmandu Limited has recently renewed its lease for a four-year term with one four-year renewal right remaining on a lease returning $247,000 plus GST and outgoings per annum. Kathmandu has been on this site now for more than 15 years.

The property generates additional income via satellite tenant Coffee Fix, which occupies a hole-in-the-wall coffee window conveniently primed to appeal to passing pedestrian traffic. The business recently commenced a one-year lease to November 2024 with four one-year renewal rights.

Both tenancies produce a combined net annual income of circa $252,000 plus GST and outgoings.

Bayleys salesperson Damien Keenan says the commercial asset is located in a superb inner-city position and stands to benefit from local investment into the revitalisation of the city centre.

“Through the Te Manawa project, local Council has refreshed the area immediately surrounding the subject property, providing increased shared amenity, and improving capacity to attract more people into the CBD.

“The property presents an immediate opportunity for a passive investor to secure a strong rental return, supported by a multinational and entrenched tenant, with additional scope for future rental growth through increased occupancy demand in the central city.”

Click here for more information on the listing.

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