Blue-chip tenant covenants are a key priority for investors eyeing industrial stock in Christchurch.
Mark Macauley, General Manager of Colliers Christchurch, says purchasers are focusing on security rather than high-risk assets in the current climate.
“It’s a trend we’ve seen over the past two years, with the emphasis very much on removing income risk. Properties occupied by unproven tenant businesses are far less sought by investors while those leased to high-performing listed entities or prominent private entities are in strong demand,” Macauley says.
“Investors would far rather have a conventional generic asset with a strong tenant covenant than a specialised asset with a longer lease term.”
Start your property search
Macauley and colleague Sam Staite, Director of Industrial at Colliers Christchurch, are currently marketing a large industrial site at Baigent Way, Middleton that is leased to Mainfreight Ltd subsidiary Owens Group.
One of the standout performers of the New Zealand Stock Exchange, Mainfreight posted a net profit of $274.3 million for the year to 31 March, up 31 per cent on the previous 12 months.
The 5.6954ha property in Baigent Way is one of the largest industrial landholdings to come to the market in recent years, Staite says, with multiple titles and a diversified income stream via six tenancies. Owens occupies four of the tenancies, while ITR New Zealand and Juralco lease the two remaining tenancies.
“This vast industrial complex offers the new owners security and fundamentals rarely seen in the New Zealand market. A-grade tenant security, fixed rental growth, spread of risk via multiple tenancies, ability to develop further, and a prime location are just some of the positives to note,” Staite says.
For sale by deadline private treaty closing 14 August, the huge Industrial Heavy zoned land sits across four separate titles at 16, 22, 25, and 31 Baigent Way, and its low site coverage presents a prime opportunity for further development.
Staite says a primary investment highlight is the rail-siding, which is critical to the transport operations of Owens.
“Every investor who knows New Zealand logistics will appreciate the scarcity of functional rail-sidings and what they mean for those businesses lucky enough to have one on their premises. Utilised by Owens most days of the year, the rail-siding is considered critical infrastructure for their operation and is a key component of this site.”
Staite says the industrial area of Middleton is one of the city’s preferred areas for medium to large-scale national and international businesses.
“New Zealand’s major transport operators are particularly prevalent in this area because of its easy access by road and rail.”
Baigent Way is located off Lunns Road, which runs from the Curletts Road motorway through to Annex Road. The site has more than 300m of State Highway 73 road frontage and benefits from being extremely close to the motorway system, linking it with Lyttelton Port and further south.
- Supplied by Colliers
