Five interconnected buildings with identified add-value upside in the heart of Timaru’s main retail strip are for sale.
The buildings are arranged in a 'U-shape' configuration and flank the heritage-listed Tekapo Building on Stafford Street, Timaru’s main retail area.
The property portfolio has been placed on the market with a deadline sale date of 19th September (unless sold prior) by its Cantabrian company owners who bought the buildings 13 years ago and have been proactive in maintenance and refurbishment work since.
Mitchell Wallace and Blair Young of Bayleys Canterbury say Stafford Street is the port city’s “golden mile” and as a location, is keenly sought-after by retail and professional tenants looking for robust foot traffic, convenience and a feeling of being part of the community.
“Despite the rise of e-commerce and changing retail patterns around New Zealand and globally, provincial centres like Timaru have retained active, thriving and socially-important main shopping streets,” says Wallace.
“We can’t underestimate the role that main streets play in these smaller towns and cities and the character that is inherent in the buildings themselves is not easily-replicated in new-build shopping centres.”
Stafford Street has been at the heart of the Timaru district since the 1860s with many of its earlier timber buildings being replaced with those of local blue stone and brick after a significant fire swept through the street in 1868.
Young says the buildings in the portfolio currently for sale include some fronting Stafford Street itself, built around 1930, along with buildings to the rear built in 1985 which connect the properties and provide the third street access point onto The Terrace via plentiful roof-top parking.
“The buildings are generally in good order, with the Stafford Street buildings recently reroofed, the roof-top parking area recently resealed and all buildings strengthened to a minimum of 67 percent new build standard.
“This provides a tangible tick in the right boxes for investors seeking reinsurance and finance.”
According to data from analyst firm Infometrics, business confidence in Timaru continues to grow steadily on the back of strong employment dynamics, increased commercial visitor numbers and heightened consumer spending.
The report showed the biggest surge in new jobs in Timaru came from manufacturing, administration and support services, transport and warehousing, the primary sector and construction.
Wallace says bricks and mortar retail is alive and well in Timaru with national and international tenants actively seeking out space along the Stafford Street retail strip.
“The properties for sale are home to Whitcoulls, Noel Leeming, BNZ and Trade Aid, with Wilson Parking managing the rooftop parking component of the offering,” he explains.
“These retail tenants are in good company as Farmers, stalwart department store Ballantynes, Rebel Sport, Glassons and Kathmandu are all close by, along with all the major trading banks.”
Collectively, the property offering returns $548,092.32 net of all outgoings per annum. Whitcoulls has six years still to run on its lease, Noel Leeming and BNZ have four years to run – after BNZ took an early three-year renewal – while Wilson Parking is on a monthly tenancy.
An additional 53.60sqm of prime Stafford Street frontage is leased to Trade Aid expiring in May 2020.
“With the exception of 363sqm occupied by BNZ on the floor above its retail storefront, the first floor of each of the buildings is vacant,” says Young.
“This includes more than 1,000sqm in the rear building which has direct roof-top parking access via a lift and stairs.
“While this space would benefit from significant refurbishment, its concrete floors and generous ceiling height would be suitable for a gym, community centre or entertainment uses, as well as more conventional office accommodation.
“Should Trade Aid not seek a new lease upon expiry, this is potentially a further opportunity to increase rental income and additionally, some restructuring of the Noel Leeming tenancy in conjunction with previous food court space could provide further upside for a forward-thinking investor.”
Timaru is the second largest city in Canterbury after Christchurch and the local council has endorsed the idea of a new steering group to develop a City Hub Strategy, recognising that proactive steps will ensure a resilient city centre in the face of changing consumer patterns and expectations around sustainability.
“This bodes well for the new owner of this opportunity-laden property portfolio as it confirms that investment and new ideas will support the ongoing vibrancy of the location,” says Wallace.
Wallace and Young believe this provincial retail portfolio will find traction with active add-value investors, syndications and family trusts and will have nationwide appeal.