With returns in the large format retail sector of the commercial property market outpacing all other asset classes, fierce competition is expected from investors for an A-grade offering on the outskirts of Blenheim.
The Kmart-anchored and Chemist Warehouse-supported bulk retail property in the evolving Westwood Business Park in Springlands has been placed on the market by its developer owners Outer Limits as it embarks on other projects within the Marlborough region.
The property has 5101sq m of lettable space across the two core tenancies, along with a 185sq m attached building occupied by café Catalyst Eatery.
Kmart is a wholly-owned subsidiary of ASX-listed Wesfarmers, a top 10 ASX company, while Chemist Warehouse is Australia’s largest pharmacy retailer with 28 stores across New Zealand.
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The Westwood property returns a passing net income of $1,055,149 per annum, with Kmart having a 10-year lease, Chemist Warehouse eight years and Catalyst Eatery a six-year lease, with rental growth provisions built into each of the leases.
Mark Hourigan of Bayleys Wellington Commercial is heading the sales campaign, along with colleagues Glenn Dick of Bayleys Marlborough and Ryan Johnson, Bayleys Auckland Central.
The property will be sold by tender, closing with Bayleys Wellington at 4pm on Wednesday 8 December, unless sold prior.
Hourigan said since its launch to the market two weeks ago, inquiry has come from institutional entities, syndicates, and expats looking to return to New Zealand with capacity to acquire assets of this value.
“There is still significant pent-up demand for high-quality large scale real estate assets in this country and based on transactional data, the pandemic has demonstrated to us that there is a wave of capital within New Zealand looking for opportunities such as this one in Blenheim.
“Given the quality of the physical asset, coupled with the ASX-listed tenant covenant and the trends for consumer spending, we’d expect this property to sell well north of $20 million and know that there is inherent capacity for investment of that value from well-resourced Kiwi-based buyers.
“What’s more, regional New Zealand is attracting strong investor interest with buyers enticed by the prospect of higher returns on investment and reflecting the shortage of comparable property within the main centres.”
Hourigan said the large format retail sector has proven resilient in the face of pandemic disruptors and was the top-performing asset class according to the MSCI property index, showing a 22.4 percent total return in the 12 months to March 2021.
“As an asset class, large format retail has defensive fundamentals, demonstrates counter-cyclical market attributes, and has a low-risk investment profile,” he said.
“As a retail segment, it’s been bolstered by a significant increase in consumer spending throughout the pandemic as these large format store operators have had the resources and business infrastructure to pivot and adapt quickly.
“The big players in the retail market have fared extremely well in the past 18 months which gives confidence to investors.”
The steel-framed bulk retail building has pre-cast concrete tilt panel exterior walls and Kingspan insulated panel roofing.
It features capacious main retail areas, back-of-house storage areas, plus an amenity block housing staff facilities and administration space.
Via their Blenheim-based development entity Outer Limits, Phil Robinson and the late John Marris started planning the Westwood Business Park back in 2004, recognising the potential for the development to complement the business activities of Blenheim’s CBD.
Bunnings Warehouse was the first store to open at Westwood in 2012. Then Foodstuffs South Island Ltd bought and developed its own site, opening PAK’nSAVE Blenheim in March 2013, followed by the opening of Farmlands in 2015, PGG Wrightson in 2016, Kmart in 2019, and most recently, Chemist Warehouse.
- Article supplied by Bayleys
