Strong tenant covenants and long leases are driving demand for industrial sites leased to fuel suppliers with more than $16 million of such stock across the country negotiated by Colliers Christchurch in the past six months.
Rory McGuigan, Industrial Sales & Leasing Broker at Colliers Christchurch, says buyers are keen on these assets because of their prime landholdings and traditionally long leases.
“We’ve seen high demand for these sites in recent campaigns, as the nature of a ground lease on freehold commercial land is low maintenance and an excellent bottom drawer investment.
"Cap rates have ranged from the low 5 per cent range up into the late 6 per cent range depending on the lease structure, and the location of each site,” McGuigan says.
Start your property search
“Most fuel providers we are working with chose to lease their sites so they can plough the funds into further expansion.”
McGuigan and colleague Sam Staite are currently marketing a high-profile site at 278 Hilton Highway in Timaru’s industrial hub of Washdyke, with a 10-year lease to leading Kiwi-owned supplier Waitomo and options to renew for two further 10-year terms.
The property has a $1.547 million price tag representing a return rate of over 6.25 per cent on the current rental.
The Washdyke area is home to a diverse range of industrial, logistics, and agricultural businesses, including McCain Foods, the DB Draught Brewery, Hilton Haulage, Farmers Mill, and Fulton Hogan, among others.
The prime 1,478sq m freehold site has approximately 45m of frontage onto State Highway 1 and has a shared driveway leading to a bare development site measuring 3,434sq m that is also available for sale.
Annual rental is $97,000 with built-in structured growth.
“The property's fundamentals are excellent, and when combined with the strength of the tenant covenant and the long-term lease, it presents as a compelling investment prospect,” McGuigan says.
Timaru sits at the heart of one of New Zealand’s most productive agricultural and manufacturing regions, making it a strategic location for logistics, warehousing, and industrial operations.
The city benefits from strong transport and infrastructure connections, including State Highway 1, main trunk rail, and the Port of Timaru – a key export hub for the South Island.
The region is actively planning for future development through growth management strategies and is benefiting from infrastructure investments.
McGuigan says Timaru’s affordability, business-friendly environment, and infrastructure investment continue to drive demand for commercial property – making it an increasingly attractive option for investors seeking long-term returns in a region with strong fundamentals.
- Supplied by Colliers
