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Prime Gisborne industrial opportunity

Published: Thu 1 Sep 2011 11:15 AM
Prime Gisborne industrial opportunity for a visionary investor
A large property in Gisborne’s main industrial area of Awapuni will be auctioned by Bayleys this month offering the opportunity for an investor to secure a strategically-located property with a lease in place, and expansion possibilities in the future.
Originally built in the 1970s and used as the distribution base for Foodstuffs, the building at 21 Solander Street was refurbished and reconfigured as warehouse-retail space for Wrightson-Dalgety in 1987. Following the merger of the Pyne Gould Guinness Ltd and Wrightson Ltd companies to form PGG Wrightson in 2005, the lease has continued with effectively the same tenant for 24 years.
There is a two x two-year lease in place from 1 July, 2011 with two further terms of four x four-years taking the final expiry date to 2023. Fruitfed Supplies is also incorporated on the site.
The property has a net lease of $160,000 per annum with the tenant paying all outgoings.
Colin McNab and James MacPherson of Bayleys Gisborne say that with limited new industrial development currently taking place on the East Coast, this substantial parcel of land and buildings on the northern side of Solander Street close to the city will be sought-after.
“The Awapuni industrial area has traditionally been a tightly-held location. The Council has re-zoned a large area to the west as rural-industrial to address Gisborne’s future industrial needs, but Awapuni remains the focal point for this activity and seldom does the opportunity arise to buy here,” says McNab.
“A visionary buyer will recognise the inherent value that industrial land so close to the city has both now and - more importantly - in the future. It is a dynamic location for anyone wanting to draw from the CBD, be close to the port, and capitalise on the proximity to Awapuni Road, SH 35 – a main arterial route just 400 metres to the south of the property.”
The freehold 8050sq m site is fully-sealed and fenced and supports 2690sq m of buildings. These include 609sq m of offices and amenities, a 1155sq m primary warehouse, 577.6sq m rural supplies store, a cart dock and an open-front shed.
“The property presents well and is very functional for its current tenant’s purpose as evidenced by the long leasing history. There is unused land to the front of the site bordering Solander Street which could offer expansion possibilities for a new owner in time whether as extra yard or parking space, or for further building development,” says McNab.
“This area is likely to remain the flagship industrial sector of the city purely because of the infrastructure pluses and the calibre of the businesses which gravitate here. Neighbouring business include Fulton Hogan’s Gisborne base, Farmers Transport, Corson Grain, Genetic Technologies, Pacific Haulage and various large wineries and other sizeable industrial operations.”
Late last year, Bayleys Gisborne was instrumental in the sale of the adjacent former Corbans Winery site in Solander Street which is now being tenanted to a variety of entities.
“That property was sold to a local investor after attracting strong interest from investors around the country. We expect a similar response to this offering come auction day as it represents a solid presence in the industrial heart of the city,” says McNab.
New Zealand’s industrial property sector has moved into recovery mode according to the latest figures released by International Property Database (IPD).
IPD monitor investment returns on a rolling annual basis based upon revaluations of a portfolio of property.
In the latest release, total returns - a combination of returns on income and capital value movements - derived from industrial property, in the year to March, totalled 9.2%. This compares with an annual total return of 6.1% in the year to March 2010 and -0.7% 12 months earlier. Over the year to March 2011 returns on income totalled 8.9% whilst capital values lifted by 0.3%. The latter figure reflects the fact that yield and rental levels have stabilised over the last 12 months.
Bayleys senior property research analyst, Ian Little, says the Gisborne market is mirroring the wider national trends.
“Rental levels have stabilised having undergone a downward correction in recent years. There is still some pressure on yields however this tends to be primarily in regard to secondary stock. Prime grade property yields now appear to have settled due to the continued demand for higher grade premises which are currently rarely brought to the market,” says Little.
The land and buildings at 21 Solander Street will be auctioned at 2pm on Friday 16 September in Bayleys Gisborne’s auction room - unless sold prior. A comprehensive property report which includes more detailed lease information is available on request.
“A switched-on investor will recognise that this property has some very tangible positives going for it. With the benefit of a committed tenant who has traded for nearly a quarter of a century from the site, plus the added bonus of as yet-undeveloped land which gives some upside to the property over time, it’s an offering not often seen in the Gisborne market” says McNab.
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