Scarcity, scale and growth at strategic Rosebank Road investment
Scarcity, scale and growth at strategic Rosebank Road investment
12 October 2013
Auckland, 12 October 2013 - At a time when growth locations are king and solid investment opportunities with good income and potential are in high demand, five buildings at 637-651 Rosebank Road in Avondale have come on the market for sale.
Marketed on behalf of Rosebank Road Properties Limited by Simon Farland, Brent McGregor and Bruce Catley of CBRE New Zealand, the property is for sale by way of Deadline Private Treaty with a closing date of Thursday 14th November at 4pm, unless sold prior.
Simon Farland, Director Investment Sales, CBRE New Zealand, says the five properties present lucrative opportunities for purchasers on many different levels: “With strong income and a location that is well set-up for growth, the Rosebank Road properties offer options, income and a sizeable portion of land when competition is heating up around the city for land with this type of zoning.”
Brent McGregor, Senior Managing Director, CBRE New Zealand, says that the opportunity consists of five buildings on one site.
“As an overall holding the properties have a total building floor area of 6,667sqm on a combined land area of 13,473sqm. The buildings range in size from 429sqm to 2,966sqm so there is good variety across the various spaces.
“637 and 651 are both quality, standalone premises; significant redevelopments with excellent frontage to the main road. The other three buildings (639, 641 and 643) while in good shape, present significant upside and opportunity should a purchaser choose to redevelop or refurbish the premises.”
“637 Rosebank Road is the most significant of the five properties, on a 5,215sqm site, with a building measuring 2,966sqm. Offering two levels of quality office space, amenities, warehousing, mezzanine and workrooms, the offices have been refurbished and upgraded to a high standard.
“639 Rosebank Road is a standalone 1970s warehouse/factory with 685sqm of rentable area. It is predominantly factory but features an internal office and showroom, and a significant yard component of some 500sqm, making the site particularly well suited to a manufacturing operation. The building offers the potential for owner occupation with shorter term holding income in place.
“641 Rosebank Road is a 1990s industrial building currently operating as a gym which includes a warehouse, separate dangerous goods warehouse and an office and amenities. The property has very low site coverage of 27%, so there is potential for development if the purchaser wanted to add value.
“643 Rosebank Road offers an attached 1980s warehouse building with minimal office, and a stud height rising to 5.25m at the knee. The building utilised as a bulk store has a total floor space of 838sq m, and land measuring 1,173sqm.
“651 Rosebank Road is the other significant standalone property on the site, with recent upgrades making it an attractive offering within the portfolio. Fronting Rosebank Road, the site offers two levels of good quality office and amenities, with a warehouse at the rear. Three tenants currently occupy the well-presented building, which has a total rentable area of 1,790sqm.”
McGregor says that each of the five buildings provides a quality investment opportunity in its own right, so CBRE is expecting interest from both investors looking to take the whole site and smaller investors looking to snap up one or two of the premises: “The site has excellent access for vehicles and goods deliveries, which is a requirement for any logistics tenants. The buildings are also located on arguably the preferred side of Rosebank Road and the site has good, wide frontage of around 100 meters to the street.”
Favourable zoning of Business Activity 6 allows for medium to heavy industrial activity, something McGregor says is an attractive element of the offer: “There is very limited supply of land with that zoning elsewhere in the city, which makes the opportunity all the more attractive as a strategic investment.”
There are currently seven tenants leasing space across the five buildings, with a yearly return of $732,315 plus GST.
Farland says: “There are varying lease terms and occupancy arrangements across the seven tenants, which offers a good blend of income stability and arrangement flexibility.”
Tenants include Derek Corporation Ltd (which leases space in two of the buildings), Nelson & Robertson Ltd, Dunlop Flooring Ltd, Zealous Fitness, Horticom Ltd, College Hill Productions Ltd, and the WMSCOG Trust.
The area, which is known as the Rosebank Peninsula, is the closest industrial precinct to the Auckland CBD and the Ports of Auckland. With just 11km between the city and the properties, it is a hugely attractive location for logistics and industrial operations.
Bruce Catley, Managing Director, CBRE South Auckland, says: “Location-wise, the Rosebank Peninsula is a prime location for industrial activity. Increasingly, businesses are seeing the benefits of the area, as the growth in the West is expected to be buoyed by the significant infrastructure underway which will improve access to the rest of Auckland.
“This is a well-established, dynamic, fast-growing and highly successful area. The bulk of activity is in manufacturing, transport, warehousing and distribution business service sectors, so there is a good spread of users here at any one time. International and national tenants work nearby, so it is not just local businesses attracted to the area.
Catley says prime space in the Rosebank Road is well sought-after as there has been limited new development in the precinct. “In addition, Prime combined net effective rents in Rosebank are currently displaying upward pressure, after remaining stable for the past two years.”
Catley adds that changes to the employee composition of Rosebank Peninsula will also see more demand for space in the future: “The Rosebank Peninsula has more than 8,300 people working here at present, but expectations are that there will be 10,000 more employees in this area by 2030. Auckland Council has identified Rosebank Peninsula as a location that will be a major beneficiary of that increase in employment density into the future, and property investors who get into the precinct now will share in those benefits as time goes on and demand for space increases.
“The property is right by the busy Patiki Road intersection and the motorway onramp for State Highway 16, so as far as connections for vehicle access and distribution links, you couldn’t ask for a better location. The precinct is just 11km away from the city centre, which means it is the closest industrial precinct in Auckland.”
Catley adds, as mentioned, that when the Waterview and Western Ring Route connections are completed in 2017, and upgrades to the State Highway network are complete, Rosebank Road will reap the benefits of being even more connected to the city and the wider North Island region.
Farland says the Rosebank Road property presents the opportunity for an investor to purchase a strategically located, income-generating site in one of the fastest growing regions in the country.
“Quite simply, demand in the Rosebank Peninsula for industrial properties is expected to continue to be strong. This is the chance for an investor to leverage off strong occupier demand, and make the most of the shortage of property opportunities in a location that has been identified as a region of significant growth.
Farland adds that while the Rosebank Peninsula is first and foremost a successful industrial hub, in recent times there has been a rise in office operations moving into commercial premises in the area.
“Due in large part to the concentrated effort to improve the infrastructure and connectivity of the precinct, the area’s reputation and profile has been steadily increasing in recent times - there are a large number of international and national occupiers in the area already, which adds to the dynamic and thriving environment out here. The Peninsula will continue to attract high calibre businesses and operations to the area.
“This is a well-maintained landholding in a superb location with a steady and significant income stream providing stability, while the opportunity for further refurbishment can be master planned for the maximum growth in value.”
“We are looking at a potent combination of factors that will work in the favour of the purchaser or purchasers. With almost 13,500sqm of total land across the site, the opportunity presents scale, scarcity at a time when there is high demand but little stock, favourable zoning and the potential for a staged development of the buildings on the site.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.