The purpose-built unit-titled precinct in the popular Bay of Plenty seaside community is home to 19 businesses including strong international apparel brands, local beauty and fashion-related service providers, and popular food outlets.
Fashion Island is anchored by Cotton On Group which leases three units with tenure through until 2030, and includes other high-profile brands including Bonds, Bendon, Converse, Sheridan, Puma, Skechers, Amazon Surf, Decjuba and Burger Fuel – all on varying lease terms.
The weighted average lease term across the precinct is 4.86 years, and the property as a whole returns a net income of $1,279,982 plus GST with lettable floor area of 3,420 square metres.
Day-to-day asset and facilities management of the outlet precinct is handled by professional managers Comac Retail Property Group with an appointed centre manager, which agents said makes the Fashion Island units an optimal hands-off investment.
The L-shaped property sits on 8,790 square metres of land within a larger integrated retail footprint in the Pāpāmoa Town Centre which has been developed over the past 15 years, and where businesses include big players like Mitre 10, PAK’NSAVE, Repco, KFC, TAB, three major trading banks, along with the Pāpāmoa Plaza.
Marketed by Ryan, Brendon and Lynn Bradley of Bayleys Tauranga, Fashion Island will be sold by Deadline Sale, closing Monday 6th December, unless sold prior.
Ryan Bradley said the property has recently been refurbished and freshened up, with the tilt-slab concrete and steel structure at 80-percent new building standard seismically, and new signage plinths making the precinct even more visible.
“This is a successful fashion outlet centre, well-supported by the local residential catchment and becoming particularly busy during holiday periods when visitors to the wider Bay of Plenty area seek out beach, surf and leisure wear at good prices.
“Underpinned by stalwarts like Bonds – which has traded for more than 10 years in their current location – and Bendon, the outlet centre has a reputation for offering value-for-money and has become a shopping destination.”
The pandemic environment with its “shop local” mantra has seen Fashion Island’s convenient and accessible location work in its favour, hitting home with residents in the broader area.
“The personal service offered in a physical retail fashion store can’t be replicated online and the centre also offers a nail bar and clothing alteration business – both services that can’t be obtained virtually, and requiring face-to-face interaction.
“Likewise, the Burger Fuel and Seafood Collective food businesses offered invaluable click-and-collect services once alert levels allowed them to do so, and they have remained busy as people tire of cooking for themselves at home and opt to support local enterprises.”
With investors around New Zealand actively on the trawl for well-returning commercial property, and with interest rates remaining low, Bradley said he’d expect sub-5-percent values to be obtained on the Fashion Island units.
“The units occupied by the larger international brand tenancies could realise around the high 3-4-percent mark given the decent lease lengths and weight of the tenant covenant.
“With commercial space in Pāpāmoa at capacity currently, those units with shorter tenures could also have appeal to owner-occupiers looking for premises within an established centre in the medium future.”
Ryan Johnson, Bayleys’ national director commercial expects investors to see real value in the offering.
“Well-located and fully-leased retail property in areas with strong growth fundamentals remains sought-after and, in many instances, offers very good value for new investors to the commercial sector,” he said.
“With industry data confirming that large format retail and non-discretionary operators like supermarkets are thriving through pandemic conditions, there is also real opportunity for other retail centres located close to these big box operators to leverage off strong traffic volumes and high pedestrian footfall.
“Retail card spending nudged upwards in September as alert levels eased outside of Auckland and GlobalData research forecast that the clothing, footwear and accessories segment of the retail market is growing at 5.1 percent, expected to reach $6.7 billion by 2025.”
Fashion Island tenant sales data supports this trend with a compelling pattern of high retail growth spend at the centre, with sales increasing exponentially year on year since 2017 with a 40-percent increase in year-to-date sales.
Bradley said that with the outlet fashion segment of the market being tried-and-true in Pāpāmoa, Fashion Island is further future-proofed in the immediate market.
“Usage covenants are in place meaning this is the only permitted factory outlet centre in the Pāpāmoa retail area which gives confidence and certainty to current business operators.
“Factory outlet by definition is ‘any retail outlet where customers can buy branded end-of-line, end-of-season or specially-manufactured stock at less than normal retail prices on a permanent basis’.”
City Council projections forecast Pāpāmoa to see the most growth of any suburb in Tauranga, rising from 29,018 to 40,339 - making up 47 percent of the city's growth over the time period.