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Childcare centre land and building offers investment portfolio building block

Tags: Commercial

The land and buildings housing one of Auckland’s biggest and most modern childcare centres has been placed on the market for sale.

The purpose-built property at 6/85 Ben Lomond Crescent in Pakuranga houses New Shoots childcare centre and the adjoining Source Café. The single-level property generates a combined rental of $420,973 plus GST and outgoings per annum.

The premises was constructed in 2016 and has been certified as 100 percent compliant with New Building Standards (NBS). The childcare space within the building is licensed to accommodate up to 115 children daily – making it among the biggest such venues of its type in Auckland.

The 756 square metre day care and café building sits on 1,899 square metres of freehold land on a cross-lease title with car parking for 33 vehicles. New Shoot’s portion of the building encompasses a substantial outdoor play area containing climbing structures, obstacle courses, grassed areas, and sand pit.

The property – but not the childcare or café businesses operating within them - is being marketed for sale by private tender through Bayleys Manukau, with tenders closing at 4pm on June 27.

Bayleys Manukau salespeople Shane Snijder and Dave Stanley said the near-new quality of the building and high standard of property amenities and play zones within it, placed the New Shoots Pakuranga site among the upper-echelon of its peers in terms of customer facilities for the young users.

“For example, the fully fenced perimeter not only keeps children as secure as possible while in care, but also allows for a park-like view over the neighbouring Cascade Creek wetland bush which runs down from nearby Lloyd Elsmore Park,” Mr Snijder said.

“Inside, the open-plan layout and design themes of the play space zones, reception areas, staff amenities, food preparation facilities, and bathrooms, all mirror a very modern proven templated model which ensures consistency of product offering across the New Shoots group.

“Similarly, the expansive sealed car parking yard within the property make it as easy and safe as possible for children to be dropped off and collected.”

New Shoots Childcare is on an 18-year lease at the site, with two further six-year rights of renewal, paying a net rental of $345,973 plus GST per annum. Rental increase are fixed at 1.5 percent annually, with market reviews every four years.

The company is a major operator in the pre-school childcare sector – with additional sites in the Auckland suburbs of Westgate, Hobsonville and Sunnynook, as well as a branch in Hamilton, and three locations in Tauranga.

Meanwhile, Source Café is on a five-year lease at 6/85 Ben Lomond Crescent, with two further five-year rights of renewal, paying a net rental of $75,000 plus GST per annum. Rental reviews are undertaken every two years.

“Source Café draws a core clientele from parents dropping off and picking up their children from neighbouring New Shoots throughout the day, as well as servicing employees at the numerous businesses located at the numerous adjacent light industrial premises,” Mr Snijder said.

“It’s a mutually-beneficial and totally sustainable business model for the café operator.”

Since 2008, the proportion of pre-school Kiwi children enrolled in early childhood education (ECE) and the amount of time they spend there have both risen. The number of children has risen from 93.6 percent to 96.6 percent, with time spent in ECE has reached an average of 21.7 hours a week, up from 13.5 hours in 2000. The Government fully funds 20 hours of care a week for all children aged three, four and five. Auckland has some 1,407 ECE centres.

Mr Stanley said south-east Auckland’s population growth, combined with more families with two-parents working full-time, had been among the key drivers of growing demand for childcare places over the past decade – and underpinned the development of the Pakuranga site for New Shoots as the anchor tenant.

“The location of New Shoots’ Pakuranga branch is in an area zoned business – Light Industrial which has seen substantial growth over the past 20 years. Many of those factories, warehouses, and retailing sites have staff members with young families…. that is children who require day care facilities. And New Shoots has capitalised on that demand by creating such a substantial operation,” Mr Snijder said.

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