New owners have big shoes to fill

The Furniture City Panmure retail outlet is expected to fetch $6 million.

Investors buying the 3277sq m Furniture City Panmure retail outlet can expect a 10 per cent-plus return, says Paddy Callesen, joint managing director of Savills.

Callesen expects to sell the big box retail outlet at 43 Mt Wellington Hwy for about $6 million and there are four years to run on the lease and two 6-year rights of renewal at annual rent of more than $639,000 with operating expenses at $15 per sq m.

"Rent increases are set at CPI of not less than 4.5 per cent or more than 6 per cent and a review is due in November next year," says Callesen, who is selling the property by deadline private treaty closing November 9.

"The unit-titled property will suit a big footprint user if Furniture City eventually leaves," he says.

Callesen says the sale comes at a time when Statistics New Zealand shows retail spending for the June quarter was up $195 million or 1.1 per cent compared with the March quarter.

"The return, the quality of the property, the area's favourable demographics and massive infrastructural changes in Panmure make this an investment that will yield big rewards in the future."

Callesen says the single storey industrial-style building was previously occupied by Fisher & Paykel and then later used by the New Zealand Army. "The premises are part of an established, integrated bulk retail centre and Furniture City's outlet is used for the sale, display and storage of furniture and associated products."

The property sits in a bulk retail area, surrounded by other national brands, including Bunnings, Warehouse Stationery, Bedpost, Resene, Fishing Camping and Outdoors, PK Furniture and Toy Planet.

Directly opposite is the Harvey Norman Centre, containing Briscoes, Rebel Sport, Hannahs, Para Rubber, Number 1 Shoes and others. Immediately to the south is Sylvia Park shopping centre.

Callesen says the property's attraction lies in the fact there is no more business zoned land in the area, the demographics are appealing and Panmure is earmarked for intensification. "Millions of dollars are being poured into the Panmure infrastructure upgrade. Where improvements are made intensification follows and property prices leap up."

He says a classic example is Te Irirangi Drive, which opened up great swathes of East Tamaki industrial land.

"Before the new highway and motorway interchanges were built land in the area sold for $50 a metre. Now investors have to fork out $350 a metre. It's the old adage of people following the piper's tune."

Auckland Council says the population in the Tamaki area, which includes Panmure, Glen Innes, Onehunga, Royal Oak and Mt Wellington is projected to increase from about 73,000 to around 100,000 by 2031.

The number of houses could increase from the 23,000 recorded in 2006 to at least 37,500 in 2031.

The council says Tamaki is the second-most important area in Auckland with 76,800 or 12 per cent of the region's people employed by 9700 businesses. Tamaki's town centres and commercial and industrial areas contribute 13 per cent to Auckland's GDP.

Callesen says this growth will impact on the look and feel of neighbourhoods and the council has to ensure growth is well planned and backed by significant investment in physical infrastructure.

"With the council pushing for greater residential intensification, particularly earmarking areas 500m from rail stations for higher density properties, business zoned land supply in constrained locations, such as the Furniture City site, will become more valuable. The vendor is committed to selling and a new buyer could pick up a higher yielding property within a sought after and growth location."

As part of improvements the Tamaki Transformation Programme (TTP) is under way.

It is New Zealand's biggest urban regeneration programme to improve housing, parks, schools, infrastructure, job opportunities and the local economy for Panmure, Point England and Glen Innes residents.

Panmure has been identified as a Business Improvement District and is targeted for additional funding for business development, increased employment and investment and improvement to its physical environment.

On the infrastructure front, the Auckland Manukau Eastern Transport Initiative (Ameti), a series of transport projects for Panmure, Mt Wellington, Pakuranga, Howick and Botany is in its second stage.

The area has some of the highest traffic flows anywhere in the country. Public transport is a poor option because buses get caught in congestion, resulting in long travel times. The two bridges across the Tamaki River carry more than 120,000 vehicles daily and have more freight traffic than any other corridor in the country.

To relieve this congestion a new Panmure Bridge is being built north of the existing one for two bus lanes and a separate cycle and pedestrian path. Callesen says the improvements will be a huge benefit to what is a limited supply of business zoned land, such as this property.

"Improved accessibility attracts a wider catchment of shoppers."