Childcare centre with long-term lease

The site of the childcare facility under construction at 2 Hillside Rd, Papatoetoe is identified by a blue border. Photo / Supplied

A fully leased childcare property investment under construction in Papatoetoe is for sale through Colliers International.

Brokers Kris Ongley and Shoneet Chand are marketing the 1031sq m freehold property at 2 Hillside Rd for sale by deadline private treaty closing on March 28, unless sold earlier.

Ongley says it's a chance for investors to secure a purpose-built childcare facility consented for 70 children on a new long-term lease with built-in rental growth.

"Scheduled for completion in June, the property will comprise a two-level childcare facility with a total floor area of 360sq m.

"The completed facility will be a beautiful learning environment with large balconies and outdoor play areas, landscaped gardens, and new equipment and furnishings. With a new seven-year lease backed by a personal guarantee, this is an ideal chance for passive investors to acquire a high-quality, low-maintenance asset with long-term stability."

Ongley says childcare properties make for very affordable investments with very low rates of obsolescence.

"Auckland's population growth continues to drive demand for more childcare facilities, which has seen operators in the Auckland region grow by almost 35 per cent in the last decade. With existing childcare centres rarely put up for sale, new developments like 2 Hillside Rd are particularly sought-after as investments."

Ongley says the seven-year lease to childcare operator Vikas Bansal, trading as Little Ducklings, will earn initial rent of $178,360 net. Two rights of renewal of six-years-each extend the lease term until at least mid-2037.

Fixed annual Consumer Price Index rent increases adjusted every two years will be no less than 2 per cent and no greater than 5 per cent annually, while market rent reviews every six years will be subject to a hard ratchet. The full net lease ensures the tenant will be responsible for all outgoings.

Chand says the property is well located on a north-facing corner site in an established residential neighbourhood.

"It sits at the intersection of Hillside and Hill Rds, only 500m from the Papatoetoe Village and Papatoetoe train station," he says.

"The family-friendly, suburban setting makes the property ideally located to capitalise on the area's growth in coming years."

Chand says the wider Papatoetoe catchment's population is expected to grow from about 188,000 to 235,000 within 15 years.

The finished childcare centre will have three separate indoor learning areas including a dedicated room for children aged under two.

Facilities will include a central kitchen, bottle-warming area, toilets and a sleep room. Staff amenities on the first floor will include a staff room, storage area, office and toilet.

The property's outdoor area will include some 50sq m of covered verandas and 269sq m of outdoor play areas.

Off-street sealed parking for nine cars will be available. The building is being constructed of timber framing on a reinforced concrete block base. The exterior will be finished with brick veneer, cedar and weatherboard cladding, double glazing, and long run roofing. Settlement will take place once a code compliance certificate is issued. The lease is due to commence after both a Ministry of Education licence and a code compliance certificate are issued.