Bayleys news & articles


Huge appetite expected for grocery asset in Tauranga

Tags: Commercial

A sizeable investment grade property built in 2018 and prominently located within Stage One of the Tauranga Lifestyle Centre in Taurikura Drive, is for sale.


A sizeable investment grade property built in 2018 and prominently located within Stage One of the Tauranga Lifestyle Centre in Taurikura Drive, is for sale.

Occupied by Gilmours, a subsidiary brand of New Zealand’s largest grocery retailer and distributor, Foodstuffs, the property has a compelling retail frontage to Taurikura Drive, a main thoroughfare connecting State Highway 36 and the Tauriko Business Estate.

Offering 4,208sqm of ground floor retail area with additional mezzanine space, the property is neighboured by Bed, Bath & Beyond and Farmers. It is a prominent component of the broader Tauranga Crossing development, which includes retail heavyweights The Warehouse, PAK'nSAVE and Noel Leeming, along with a raft of independent retailers, food and beverage operators and a cinema.

The Gilmours-occupied property is privately-owned and is for sale by tender closing 4pm, Thursday 1st October. It is being marketed by Ryan Johnson and David Bayley of Bayleys Auckland, with colleague Jo Stewart, Bayleys Tauranga.

Bayleys’ national director commercial and industrial Ryan Johnson, said there is demonstrated investor appetite for grocery sector property and bank willingness to lend on such non-discretionary assets.

“The recent sale by Bayleys of two modern supermarket-tenanted properties in Orewa and Papakowhai for a combined total of more than $40 million, was clear evidence of the appeal of well-located property in the grocery sector.

“The sector has countercyclical investment fundamentals on the back of sustained consumer demand and insulation from economic downturns.

“The low cost of debt, the prime location and the fixed growth profile of the lease with Gilmours, makes this proposition – which has the additional benefit of being in the all-important ‘Golden Triangle’ economic zone – inherently strong in today’s market.”

Modern Merchants Limited, trading as Gilmours, has a 12-year lease from 30th April 2018 with one, six-year right of renewal. The rent is reviewed biannually to CPI plus 1-percent. It is a subsidiary of Kiwi owned-and-operated Foodstuffs, New Zealand’s largest grocery retailer and distributor, and one of the country's largest organisations with brands including New World, PAK'nSAVE, Four Square, Raeward Fresh, Write Price, Shoprite, On the Spot, Trents, Henry's Beer, Wines & Spirits, and Liquorland.

The property is zoned Tauriko Industry, has a total lettable are of 6,107sqm and returns a net income of $732,508 per annum, plus GST and outgoings.

Jo Stewart says the success of the wider Tauranga Crossing development to date, and proposed further development of around 25,000sqm of retail and commercial space, future-proofs the location of the Gilmours-occupied property.

“As New Zealand’s second-fastest growing city by population and best-performing New Zealand region by GDP growth, Tauranga has robust investment credentials.

“As a region, it’s proving increasingly sought-after by buyers who have been priced out of the Auckland market and those in search of seemingly-elusive income in this era of cripplingly-low bank term deposit rates.

“The low interest rate lending environment is creating fierce competition in the hunt for income on well-tenanted offerings and the grocery-related tenant here only amplifies the appeal of this property.

“It’s the quintessential defensive real estate asset class and the pandemic backdrop has ramped this up by several notches again.”

The building is 100 percent seismically-compliant and features reinforced concrete foundations, steel portal frame and concrete tilt slab exterior walls. There is an attractive glazed store frontage, along with 10 dedicated car parks and additional common car parking.

Delivery goods access is via a rear service lane. This part of the property is fenced and sealed providing more than 1,000sqm of rentable yard and a generous, functional covered dock area suitable for devanning of product.

Tauranga Crossing is the newest regional shopping and lifestyle centre in Tauranga, developed in stages following the opening of the ‘Town Centre’ in 2016.

At present, Tauranga Crossing comprises 45,724sqm of retail area with more than 120 retailers operating across The Centre and Lifestyle Centre. When fully developed, Tauranga Crossing is estimated provide approximately 70,000sqm of retail area, with a trade area population of 284,370 and projected expenditure of $3.6 billion from its catchment.

Gilmours is New Zealand’s largest supplier and distributor of wholesale food and beverages to the food service and convenience sector, operating through seven owner-operator stores.

Related articles