Investment with strong tenant covenant
A near-new industrial property in South Auckland is for sale with a longterm leaseback to one of New Zealand's largest steel manufacturers.
The property at 83A Boundary Road, Papakura, is one of five standalone buildings in a modern industrial development that are occupied by local and international businesses.
It comprises a functional warehouse and office building on a 4,012sq m freehold site with three points of entry, full drive-around access and a fully fenced yard area.
It is being sold sale with an initial leaseback of eight years from settlement, plus rights of renewal.
Reoco Limited will pay $271,767 plus GST in net annual rent, with fixed annual rental increases of 2.5 per cent.
The lease is guaranteed with a 12-month bank bond, which provides added security at a time when tenant covenant is a paramount consideration for investors.
The property, which is being being marketed by Colliers International, is for sale by deadline, with offers closing at 4pm on June 17.
Josh Franklin, industrial director at Colliers, says investments of this type are in demand in the current market.
“It’s a near new building that provides low maintenance in a location that continues to flourish. If you’re an investor, it’s clear to see the way Auckland is trending south with developments such as Drury nearby and investment in infrastructure. This gives potential for growth as well as a safe return.
“Reoco is recognised as an industry leader and employs more than 40 staff and contractors.
“With such strong tenant covenant, the property for sale is expected to attract investors looking to secure a foothold in a key Auckland growth hub.”
Hamish West, industrial director at Colliers, says the property offers a desirable 80:20 warehouse to office ratio. “This versatile investment property provides 1,510sq m of warehousing and 271sq m of singlelevel, modern office space," he says.
“The building has been designed to allow maximum efficiency, with the main roller door positioned to enable trucks to reverse straight in from the driveway to load and unload product.
“Colliers has sold several buildings in this development and the quality construction has underpinned the demand, along with the location and functionality."
Colleague Jack Tuson says Papakura is well positioned to capitalise on South Auckland’s growth, as nearby Drury and the surrounding areas are set to undergo a huge transformation over the coming years.
“Papakura is an easily accessible location within the ‘Golden Triangle’ of New Zealand’s major growth cities of Auckland, Hamilton and Tauranga. The regions combined make up 50 per cent of New Zealand’s population and return 50 per cent of the country’s GDP.”
Franklin says Papakura’s industrial areas are booming and this has been accelerated by the shortage of industrial land and buildings across South Auckland.
“Business owners are seeing the huge benefit of positioning their businesses in the South, especially when they also service customers in the Waikato and Bay of Plenty regions.
“Papakura’s established industrial areas provide 135ha of predominantly Heavy Industrial zoned land and buildings. Major occupiers include Griffins Foods, Independent Liquor and Fletcher Concrete.”
West says the development of Drury South Crossing – a 361ha master-planned, mixed-use precinct next to SH1 – will further increase the popularity and huge potential of Auckland’s South.
“Large new residential developments at Paerata Rise and Auranga will ensure a large staff catchment is right on the door step. The wider area will have a forecast population of a further 30,000 residents in the next
30 years.”
Drury South will comprise 145ha of industrial and commercial land,
85ha of parkland and 45ha dedicated to a new residential community.
Another 51ha of residential and commercial development will be added to Drury Township.