A 25-year Farmers' lease at Whanganui

Whanganui Farmers is part of the Victoria Centre in the main shopping precinct.

Commercial property company JLL is marketing a significant retail portfolio for sale in Wanganui.

JLL agent John Binning is marketing 85-97 Victoria Ave and 74-96 Hill Street for sale by expressions of interest, closing October 31, on behalf of a UK-based vendor.

These premises are part of a new retail development in the very heart of Wanganui's main shopping area, which was completed in 2015. It is home to a 5,500sqm Farmers department store as well as a number of retail shops.

Victoria Ave and St Hill Street run in parallel and are connected by Maria Place. The properties being marketed for sale surround a large car park between them, which is also included in the sale.

There is a covered walkway running across the carpark, allowing customers to walk directly from the Farmers to the specialty retailers.

The Farmers Store consists of 5,500sqm over two levels, connected by escalators and lifts. This building is leased to Farmers on a 25-year term at $200psm, which brings in $1,103,798pa. The Farmers lease commenced on March 1, 2015 and expires in 2040.

On Victoria Avenue there is 1,180sqm of speciality retail space, which can be split into various tenancies to suit. This space is currently vacant but there are several interested parties in negotiations.

Consequently, the vendor is prepared to grant an 18-month rental guarantee. These premises have the potential to bring in $383,500pa, bringing the total income for the portfolio up to approximately $1,487,298pa. The potential exists to further enhance this income by letting individual carparks out, as neighbouring carparks have all been let at $300 per month each.

"Wanganui is seeing a two-tier retail leasing market with newer well-located premises obtaining a significant premium, compared to older space.

"Recent reviews of the Whitcoulls and ANZ premises in Wanganui have seen significant increases, confirming Victoria Avenue rentals can go as high as $450 to $500 psm," Binning says.

"And of course the fact that this is a brand new building means the new owner can expect minimal capital outlay on maintenance."

Wanganui District has a population of more than 43,600 residents and much of its economy relates to the farming industry surrounding the city. Tourism is becoming a major income stream for the district.

Total visitor spending in the Wanganui District for the year ended June 2016 was $112 million, an increase of 8.7 percent from 2015.

The region has been identified by the government as an area with good growth potential. The Manawatu-Wanganui Regional Growth Study was released in July 2015.

It is an independent report commissioned by the Ministry of Business, Innovation and Employment (MBIE) and the Ministry for Primary Industries (MPI), in conjunction with the region.

The report says "there is real scope to increase incomes and employment in the region through building on its various strengths, such as its fertile productive land, its location as a natural transport and logistics hub for the lower North Island, its internationally renowned tourist destinations and its strong food innovation and agri-business research history.

"The region has an abundance of underutilised resources - human, natural and physical - and significant pockets of wealth that could be gainfully employed to improve prosperity for the region and for New Zealand as a whole."

The latest (June 2016) Regional Economic Report for the Manawatu-Wanganui Region shows a strengthening in economic growth, fuelled by increased building activity.

There has been a 43 percent growth in the number of new consents for construction of houses in the region, which is an increase of 200 houses from the previous year. The area is seeing population growth from overseas migrants, representing an 8 percent increase from the previous year.

The value of electronic card spending in the Wanganui district increased by 3 percent between June 2015 and June 2016, which matches the national figure.