A large industrial complex and landholding on the outskirts of Palmerston North has been put up for sale by Fonterra with leases over part of the property to Fonterra and Goodman Fielder.
Located at 1 Reserve Road, Longburn, just to the south of the Palmerston North city boundary, the offering encompasses approximately 16,500 sq m of industrial and commercial buildings on a 4.5609ha site.
The property is located across from Fonterra’s Longburn milk processing plant and is being taken to the market as part of a rationalisation of the cooperative’s non-core property assets.
Fonterra is leasing back 1389sq m of workshop space and a 2864sq m yard area for three years to June 2024 with a one-year right of renewal.
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Longstanding occupant Goodman Fielder is the property’s largest tenant, currently on a month-to-month lease. Its Meadow Fresh dairy products division occupies 9000sq m of warehousing including a substantial canopy with drive-through access for truck loading and unloading.
The property is also located alongside a rail siding and has substantial frontage to the North Island main trunk rail line.
Meadow Fresh produces a range of milks, yoghurts and cheeses with its two main plants in Longburn and Christchurch employing 400 people and processing over 190 million tonnes of milk a year.
Total annual gross rental income of $688,000 is currently being generated from the leases to Goodman Fielder and Fonterra.
The property is for sale by deadline private treaty closing on December 16.
Bayleys Real Estate commercial and industrial director Chris Bayley and corporate projects director Gerald Rundle are marketing the offering in conjunction with Bayleys Manawatu senior broker Karl Cameron.
Chris Bayley says in addition to the areas leased to Fonterra and Goodman Fielder there is approximately 2500 sq m of warehouse space that is vacant along with all of 3697sq m of former administrative and laboratory premises spread across several buildings. There is also a significant amount of unused land with development potential.
Bayley says the property offers opportunities and options for a wide range of buyers.
“These include investors with a hold and lease strategy and developers and land bankers who can access the substantial holding income while considering future uses for the site. Opportunities to secure industrial properties of this scale and calibre of tenants with the future growth potential of this offering are very limited in the Manawatu area.
“There is substantial scope to add value by possibly negotiating longer term leases with the existing tenants, sourcing new tenants, as well as redeveloping the area encompassing the disused administration block and the large, under-utilised carparking and land area surrounding it.”
Gerald Rundle says there could be a major opportunity as well for an owner occupier to utilise most of the site, given the short-term nature of the lease to Goodman Fielder.
“There may also be potential to subdivide the balance of the property not occupied by the two tenants and redevelop it to provide modern industrial premises for small to medium sized businesses, adding significantly to the existing rent roll. There are endless possibilities with a property of this size.”
Karl Cameron says Palmerston North’s growth as a major distribution centre for the lower North Island in recent years has put a lot of pressure on the supply of industrial land and premises.
To help alleviate this and provide additional land for development, the Palmerston North City Council has rezoned around 85 ha of land in the Longburn area for wet industry and general industrial uses, including freight and distribution activities. This includes the 33ha Braeburn industrial area located next to Fonterra’s processing plant.
Cameron says the proximity of this land to SH56, the main trunk rail line and a proposed regional freight ring road around the outskirts of Palmerston North makes it ideally suited for development into a major industrial hub.
“The Longburn area is well serviced and industrial land is significantly cheaper here than in Palmerston North, which is only ?five to 10 minutes drive away.
“By significantly increasing the supply of high-quality, affordable industrial land in the region, the Longburn growth project is expected to stimulate investment in dairy, logistics and other sectors of the regional economy.
“The sale of the 1 Reserve Road represents an exciting opportunity to be part of and benefit from this project.”
- Article supplied by Bayleys
