In a rare move, two central Invercargill buildings housing three blue-chip tenants are being offered for sale on the open market.
Colliers is selling 172–186 Tay Street on State Highway 1 by deadline private treaty, closing 18 July, marketed by Directors Dean Collins, Hamish Doig, Peter Herdson, and Blair Peterken.
The larger building is anchored by Woolworths and Woolworths Pharmacy with 11 years remaining on the initial term of lease with rights of renewal extending through to 2065, while Animates and Triton Hearing occupy the second building, to the east of the site.
The complex is serviced by 163 car parks.
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Modern buildings anchored by a long-term lease to a listed tenant, along with leases to other strong tenants, with a mixture of CPI, market, and turnover-related rent reviews, are seldom found on the open market in the wider South Island region.
The two buildings, totalling 5,161sq m, sit on a large 14,160sq m site with frontages to Tay and Esk Streets of 161m and 121m, respectively.
The main building, housing Woolworths, was constructed in the early 1990s and extended in 2021 while the second building was added in 2017 by the vendor.
The total annual net rental generated from the three tenants is approximately $1,688,675.
Herdson, National Director of Capital Markets at Colliers, says supermarket tenants are always a drawcard for investors.
“One major selling point of this offering is that future rental growth is tied to its trading performance.
"Supermarkets have continued to trade strongly in recent years as they are able to navigate a range of different economic environments, underpinned by their status as an essential business.”
Located on the main arterial route north and south from Invercargill’s CBD, the property is just 750m from the new Invercargill Central mall.
Neighbouring businesses include Harvey Norman, Burger King, Mitre 10 Mega, and Pak‘nSave.
Collins, Director at Colliers Otago, says the Business 1 zoned site is underpinned by a strong underlying land value.
“The 15,137sq m Invercargill Central development has breathed new life into the city centre.
"It contains retail, hospitality, civic, entertainment, and commercial zones, connected by new and existing pedestrian links.
"There is also a new nine-storey office building, known as 25 Esk, and is located on a prominent corner, which has added prime commercial space and a substantial boost to foot traffic.”
Peterken, Director of Capital Markets at Colliers, says investors want long leased assets with strong tenant covenants such as Tay Street.
“There is positive sentiment within the broader market as purchasers with a long-term view will note we are likely at the top of the interest rate cycle and access to capital will possibly become cheaper in the next 12 to 18 months when the Official Cash Rate is lowered by the Reserve Bank of New Zealand,” Peterken says.
“Before that takes place, strategic investors remain active as they look to get ahead of the curve and bolster their portfolio with assets that provide long-term upside.”
- Supplied by Colliers
