The land and buildings housing the Vehicle Testing New Zealand motor vehicle inspection business in Rotorua have been placed on the market for sale.
VTNZ started its life in 1994 as a state-owned enterprise following a review of the Ministry of Transport. VTNZ was privatised in 1999, and purchased by the Motor Trade Association. VTNZ used to be known by its full name, Vehicle Testing New Zealand before re-branding to its abbreviated name in 2004. It is New Zealand’s largest vehicle inspection company.
Also in 2004, VTNZ purchased the business of On Road New Zealand. On Road added another 14 stations and 250 staff which at the time increased VTNZ's coverage to 75 testing stations nationwide with staff numbers close to 1,000. In 2008 the On Road stations were rebranded to VTNZ which meant there were 80 bright orange testing stations spread around the country.
There are now 82 VTNZ testing stations nationwide carrying out warrant of fitness inspections. The brand is 60 percent owned by German-based automotive testing/inspection/certification company DEKRA SE.
The Rotorua VTNZ premises on 3,595 square metres of land has dual access from White and Marguerita Streets. VTNZ currently has a 10-year lease on the 1130 square metre building, with the first right of renewal in 2024 and generating annual rental revenue of $143,362 plus GST per annum - with four further three-year rights of renewal – taking the potential expiry out to 2036.
Rental increases every three years are linked to the consumer price index (CPI). The premises is being sold at auction on April 16 through Bayleys’ Rotorua.
Bayleys Rotorua salesperson Mark Rendell said the freehold property was zoned Industrial A. He said the single-storey building was constructed of reinforced block walls with cantilevered concrete columns and steel trussed ceiling with two car lanes and two heavy vehicle lanes. It is a multi-use building surrounded by a variety of businesses including engineers, kitchen joiners and rural supply retailers.
“In 2013 the landlord carried out significant redevelopment work to the premises at a cost of more than $369,000 to accommodate truck and trailer and bus inspections – reflecting the high volume of trucks and tourism transporter vehicles now operating in and around Rotorua,” Mr Rendell said.
“Access and exits are made easier for these bigger vehicles with a substantial yard at the front of the premises and from the dual road frontage which allows the convenience of drive through.
“The tenant has agreed to pay this loan back, with interest, over a ten year period at $3,824 plus GST per month. This makes the total income for the first ten year period up to 2023 a total of $189,254 plus GST.”
The building has a New Building Standard rating of between 72 - 95 percent – equivalent to a Grade B seismic risk – and features administrative offices, waiting rooms, staff lunchroom, and amenities. Mr Rendell said the VTNZ business was a reflection of the ever-improving state of Rotorua’s commercial
sector. Economic data research and analysis agency Infometrics reports that the city’s economy grew by 2.9 percent in the 2014 year and is now 15 percent bigger than the post-global financial crisis trough of 2009/2010.
“Retail trade in Rotorua is growing at a robust rate. Tourism activity has grown quickly over recent months and represents 9.8 percent of Rotorua’s gross domestic product. Forestry export prices have recovered. Conditions in Rotorua’s labour market have improved,” said the Infometrics report.
"Car registrations rose by 25 percent in Rotorua (in 2014), compared with a 21 percent increase nationally. Similarly, commercial vehicle registrations increased by eight percent in 2014. Some 552 commercial vehicles were registered in the district in the year to December 2014. This is higher than the ten year annual average of 490,” added the Infometrics report.
All of this had underpinned revenue streams for the VTNZ business – which provided inspection services to trucks, small passenger service vehicles and larger coaches, as well as Road User Charges, Registrations and Driver Licensing, Mr Rendell said.
“The building was originally designed with more a ‘public’ clientele in mind – being the likes of cars, domestic-use trailers, motorcycles and small tradesman’s vehicles. This latest economic data justifies the decision to take a broader approach to servicing commercial vehicles alongside the traditional ‘household’ cars,” he said.
“The quality of the tenant is an important factor in assessing the investment fundamentals for any light industrial building like this. The growing demand for the services delivered by VTNZ Rotorua reflects not only the quality of the brand, but also the growth in its market share of vehicle inspections in the city, and this will give confidence to investors.”