Long leases at new Te Rapa industrial-retail property

The low-maintenance, high-quality fitted out building has 55 on-site car parks included in the rental.

A new, high-quality Te Rapa industrial/retail property in Hamilton, with two well-established tenants taking up long leases, is on the market.

The 1700sq m building, on a 3524sq m site, at 20 Karewa Pl, is surrounded by other large buildings with national retail tenants in an area of Te Rapa that has few vacancies, high growth and is close to The Base, one of the country's biggest regional shopping centres.

Burnsco, one of the biggest sellers of marine, recreational vehicle, and motorhome accessories in New Zealand, is the anchor tenant. The other tenant is Tu Tonu, an ACC-accredited primary health provider.

The freehold property is being marketed by Bayleys Hamilton salespeople Mike Swanson and Alex ten Hove at auction on August 15. The property features in Bayleys' latest Total Property portfolio magazine.

"The modern construction, low-maintenance, high-quality fitted out building has 55 on-site car parks included in the rental, with two access points off Karewa Pl," Swanson said.

"The property also has a valuable retail resource consent for the Burnsco tenancy, under the Hamilton City Council's operative district plan industrial zoning."

Both tenants are on initial six-year leases, returning a combined yearly income of more than $425,000 plus GST.

Burnsco's six-year lease over its 696sq m tenancy with 30 car parks started in December last year and returns $167,388 plus GST a year.

Ten three-year rights of renewal are written into the lease with the final expiry in 2054. Rent reviews to market are every six years from 2024 and to CPI from 2027 and every six years after.

Tu Tonu's lease over 1004sq m and 25 car parks started at the beginning of the month. It has two six-year rights of renewal with the final expiry in 2037 and returns $259,500 plus GST a year. Rent reviews every three years to market and to CPI every two years are written into the lease.

Swanson said the property is expected to be snapped up. "It is a new, premium-grade building, in an area of high growth, with two blue chip tenants providing a good passive income — property fundamentals every investor strives to add to their portfolios.
Swanson's colleague ten Hove said the property parallels the strength of the tenants' profile, anchored by the Waikato economy.

"Extensive naming rights signage on the building ensures it is one of the most instantly recognised properties in the Te Rapa precinct," he said.

Te Rapa's low vacancy rates in the industrial zone are expected to continue. "The pace of growth is driving a wave of new development and rents for better quality properties are expected to show further improvement," ten Hove said.

"The golden triangle of Auckland, Hamilton, and Tauranga produces a staggering 50 per cent of New Zealand's GDP, along with more than 70 per cent of the country's industrial and commercial development consents," said Swanson..

Lead tenant Burnsco has 15 stores from the Bay of Islands to Christchurch. Tu Tonu provides a clinic for physiotherapists, sports rehabilitation and wellness services, incorporating a gym, athletic zone, multi-function sports court and consulting rooms for 15 different professions.

Located within the industrial zone of Te Rapa, Karewa Pl connects Wairere Dr to Te Rapa Rd, by Eagle Way. Te Rapa Rd and Wairere Dr are major arterials in the city.
Near neighbours to the new property include Countdown, Kmart, Couplands Bakery and possibly another supermarket will be developed in the precinct.