Tui Products is spreading its wings

Tui Products has had very good growth over the past three to four years. Photo/George Novak

Tui Products, which moved into its purpose-built new Tauranga headquarters in 2014, has announced that building owner Pacific Property will build a $1.5 million, 1500sq m extension to help it meet faster-than-expected growth in demand.

The expansion will bring Tui Products' total built space to 12,000sq m on the Truman Lane property.

Tui has about 85 staff throughout NZ, with around 60 based in Tauranga.

The extension is not expected to affect staffing as the additional space will be devoted to extra storage capacity.

"We always had provision for expansion," said Tui managing director and co-owner Don Forgie.

"But we didn't expect to do it so early. We've had very good growth over the past three to four years."

Tui originally formed a 50-50 joint venture with Wallace Developments to fund and develop the project, then the developer partners sold the building to Pacific Properties for about $12m and entered into a 20-year leaseback agreement.

Tui said the expansion was being funded out of a new $15m capital raising by Pacific Property, which was managed by Property Managers Group (PMG). The funds were a mix of about 55 per cent equity to debt and would also go towards the purchase of commercial office properties in Auckland.

PMG chief executive Scott McKenzie said the offer had been oversubscribed, and suggested there was good appetite for an additional capital raising to fund further properties, which Pacific Property was expected to announce before the end of the year.

"And while a large number of the investors are local to the BOP, there was also interest from outside the region," Mr McKenzie said.

Filling the offer was helped by the fact that Tui was a key tenant, he added.

"Tui Products is now a national success story, having grown much faster than anticipated in the last two years."

Mr Forgie said Tui first spoke to PMG about an expansion in June last year when it became clear it was going to need more storage space.

"Property Managers Group were very receptive," Mr Forgie said. "They have taken a real interest in the Tui business and genuinely care about our success."

Tui relocated from Palmerston North to its new head office in Tauranga, which was its main manufacturing site and centre for North Island distribution. It also had a distribution operation in Christchurch and manufacturing in Invercargill.

"It's been brilliant, being based in Tauranga," said Mr Forgie. "From a staff point of view the lifestyle is obviously great."

The location worked very well in terms of sourcing raw materials, and distribution.

Construction was expected to begin in early December and be completed by next April.

"It's fabulous to see significant organisations and brands like Tui Products choosing to locate themselves in the BOP and continuing to expand from here," said Priority One acting chief executive Greg Simmonds.