High-profile Woolworths Ashburton South supermarket property a top passive earner

The opportunity to own the Woolworths supermarket property alongside State Highway One in Ashburton is on offer through CBRE.

The stand-alone freehold property, at 2 East Street, has rapidly become the dominant supermarket – Woolworths Ashburton South – in the affluent Canterbury town since it was built in 2017. 

CBRE brokers Tim Rookes, Cameron Darby and Caiti Morgan are marketing the asset for sale via expressions of interest closing on October 31.

“This is an excellent opportunity for local and national investors to secure a recently-built prime asset, with a strong income stream derived from a non-discretionary retailing sector,” said Rookes.

"With an improving debt market environment, strong retail property market fundamentals nationally and the onset of long-awaited interest rate cuts, now is an ideal time for investors to consider quality acquisitions like this."

The supermarket has proven to be a strong performer since opening, with average annual turnover growth of 7.2% over the past three years and strong growth forecasts.

As such, Woolworths NZ has demonstrated its confidence in this location by committing to a new 10-year lease, providing an outstanding passive holding with strong security of income, said Darby.
 
“We expect this asset to be highly attractive to investors as a long term, high-quality commercial holding with an exceptional tenant covenant, in an extremely high-profile location which services a vast customer catchment. The lease structure also ensures a low-risk, long-term income stream that is resistant to market downturns.”

The lease to Woolworths generates over $1.3m in base annual rental, with the opportunity for rental growth built into the lease providing a secure income stream.

The Woolworths brand is well known and established in this location and offers a strong investment proposition backed by a large Australasian corporation, Morgan said.
 
“Purchasers can take a high degree of confidence from a tenant that is ultimately owned by Woolworths Group, Australia’s largest supermarket chain.”

Woolworths New Zealand is one of the country’s largest employers. Part of the ASX-listed Woolworths Group, it operates over 185 supermarkets in New Zealand and employs 20,000 people. 

The recent construction of the 3,857sqm building ensures seismic performance as well as an up-to-date store format, including a recent extension to create a dedicated click & collect facility and external & internal rebranding work. 

It is located directly next to the Ashburton Kmart store, providing the benefit of an adjoining drawcard anchor with the two stores creating a destination retail precinct locally, said Morgan. 

“The Woolworths and Kmart sites are seamlessly integrated via the large car parking area, with the two anchor retailers providing a mutual customer draw. Both properties have outstanding brand visibility to State Highway One – you can’t drive through Ashburton without seeing them.”

The supermarket’s main trade area encompasses a growing population base covering much of the Ashburton District, including the towns of Methven, Rakaia and Hinds. 

Ashburton has traditionally been a farming hub serving an affluent rural population base with an average per capita income slightly higher than the South Island and national averages.

The steady development in and around the town over many years, including town centre commercial projects and the waterfront housing development at Lake Hood, demonstrates the underlying wealth in the area, Rookes said.

“Ashburton is becoming recognised as a worthy destination for property investment, with more national investors now considering geographical diversification opportunities in the area alongside the existing strong depth of private capital that is active locally.”

2 East Street is a 1.36ha site visible to 8.4 million vehicles passing annually. This profile, along with its access from a traffic light-controlled intersection and the adjoining Kmart store, make it one of the best sites for retailing in the region.