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City’s biggest retail property portfolio placed on the market for sale

Tags: Commercial

One of the largest singularly-owned portfolios of big-box retail shopping premises in New Zealand has been placed on the market for sale.

The portfolio contains four properties located in Hastings’ Park Mega Centre in Hawke’s Bay, with a tenancy list featuring some of New Zealand’s premier retailing brands – such as Briscoes, Rebel Sport and Noel Leeming. Each property is on its own individual freehold title.

Park Mega Centre is a well-established retail destination some 550 metres north of Hastings’ Central Business District. Other large format retailers within the precinct or located nearby include household goods retailers The Warehouse and K-mart, clothing chain Kathmandu, home cleaning products giant Wet & Forget, vacuum cleaner specialist Godfreys, home DIY products retailer Mitre 10 Mega. The site was previously the Nelson Park athletics track and grandstand.

The four properties up for sale within the Park Mega Centre can be tendered for individually, as one entire lot, or in any combination of single properties. They are all owned by the same vendor – a commercial property investor.

The four tilt-slab big-box premise at 536, 538-540, 610 and 612 Karamu Road North are being jointly marketed for sale by tender through Bayleys Auckland salespeople Mike Houlker and Sunil Bhana, and Bayleys Hawke’s Bay salesperson Rollo Vavasour, with tenders closing 1t 4pm on August 8.

Combined, the four properties for sale generate an annual net rental of $1.359 million plus GST. Among the tenancy schedule of properties on offer are:

• The Clearance Shed occupying a 1,458 square metre building constructed in 2011 on a lease currently running through until 2025, with two further seven-year rights of renewal, paying annual net rental of $285,000 plus GST

• Briscoes/Rebel Sport occupying a 3,848 square metre building constructed in 2017 currently on a lease running through until 2026, with three further three-year rights of renewal, paying annual net rental of $644,920 plus GST

• PETstock occupying a 1000 square metre building constructed in 2017 currently on a lease running through to 2024 with two further six-year rights of renewal, paying annual net rental of $220,000 plus GST and

• Noel Leeming occupying a 1,250 square metre building constructed in 2014 currently on a lease running through to 2021 with two further six-year rights of renewal, paying annual net rental of $209,000 plus GST.

Lot 3 housing the Clearance Shed is a 1,919 square metre landholding. Lot 4 housing Briscoes and Rebel Sport is a 4,498 square metre landholding. Lot 5 housing PETstock is a 1,396 square metre landholding. Lot 6 housing Noel Leeming is a 1540 square metre landholding. All four blocks are freehold titles.

The four sites each have a one-sixth share in 7,452 square metres of land which has vehicle access and common car parking areas as part of the greater Park Mega Centre which has been developed into a collection of large format retail buildings over the past seven years. The shared sealed car parking sustains modern spot-lit parking for some 215 vehicles intermingled with kerbed gardens and drainage.

“This is certainly the biggest single retail sell-down in the Hawke’s Bay which anyone in the office can remember for decades. In fact, you’d have to go back to the turn of the last century to find anything of this size and scale coming onto the market,” Mr Vavasour said.

The properties are all zoned for large format retail use under Hasting’s District Council’s development plan. In addition to large format retail operations, the land-use classification allows for supermarkets, recreation activities, commercial premises, and a residential component on the upper levels of certain sites.

Under the council’s site-specific Mega Centre Development Concept Plan guidelines, all large format retailing and commercial premises must have a minimum floor area of 1,000 square metres, while food and beverage premises permitted on sites with a minimum floor area of 100 square metres.

Mr Houlker said the quality and age of the four Karamu Road North buildings, combined with their location as pillars of Hastings’ foremost retail location, made them attractive investment options.

“A major factor now in the Hawke’s Bay commercial property market is the age and construction buildings and their seismic strengths as insurance premiums for some pre-1935 structure has increased substantially if they have low NBS ratings,” Mr Houlker said.

“The four properties are all developed with modern large format high-stud open-plan retail buildings situated towards the southern and western end of the Park Mega Centre – with all having good profile to the share access lot.

“All the current rents with the four tenancies are below comparable market levels. As the lease terms progress, the initial rental levels are stepped or at a fixed percentage increases - which will be attractive to potential purchasers.”

Mr Bhana said the four Karamu Road North premises were in stark contrast to other opportunities on the market in Hawke’s Bay

“Generally, tenant demand for older commercial property in Hawke’s Bay’s major conurbations has been low. There is also an oversupply of secondary accommodation in both retail and office sectors in both Hastings and Napier,” Mr Bhana said.

“Conversely, demand for good quality commercial property such as these Karamu Road North premises is strong – with a good volume of sales transactions and lowering yield levels. Good quality commercial property is attractive – especially if a good tenant covenant is offered with CPI-indexed rent reviews such as this portfolio contains.”

The quartet of Karamu Road North outlets are all built on reinforced concrete foundations, with varying amounts of tilt slab concrete reinforced walls, steel framing and steel portals. All four properties have 100 percent ratings of New Building Standards.

All four buildings have commercial-grade air conditioning in customer areas, while staff amenities at each property include kitchen areas and separate toilet facilities.

“An independent report on the properties notes they have all been consistently maintained to a high standard over their very lifespans,” Mr Bhana said. “That is pretty much a pre-requisite from the A-list tenancies in the four buildings.”

Briscoes and Rebel Sport are both part of the NZX-listed Briscoes Group – with 57 Briscoes stores located around New Zealand, and 33 Rebel Sport outlets. Noel Leeming is New Zealand’s leading consumer electronics and appliances multi-channel retailer – with 79 stores nationwide.

The New Zealand-owned Clearance Shed chain first began trading in New Zealand in 2009 and now has 11 stores nationwide selling domestic household products.

Meanwhile, PETstock is an Australian-owned company with 11 sites throughout New Zealand selling grooming, feed, training and cage housing products used by pet owners.

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