DTZ Facilitates $8.55M Te Rapa Bulk Retail
28 October 2005
DTZ Facilitates $8.55M Te Rapa Bulk Retail Sale to ING
DTZ's Hamilton based retail specialist, Alan Pracy, has recently secured the sale of a portion of a new Hamilton bulk retail development to ING Property Trust for over $8.55 million.
The new semi bulk retail centre is situated on Te Rapa rd with dual frontages to Maui St & Te Rapa Straights and has lately become the new bulk retail destination serving the greater Waikato area. The portion sold to ING comprises 500sqm on about 1,5 hectares divided into four retail outlets. All the shops are independently titled and this block of 4 was developed and previously owned by Auckland based entrepreneurs.
The tenants, who have been trading for about a year, are Red Paths, Bed Post, Betta Electrical and Furniture Court. The property is directly opposite Harvey Norman and is near other bulk retailers, including The Warehouse & the new Dress-Smart development.
"This was an astute purchase by ING Property Trust. Bulk Retail is a very popular asset class at the moment and the returns have been good. The buildings are new, Leases are only about a year old and it is a low risk, low management asset," says Alan Pracy.
The property has a lease term of 6.31 years and the initial rental of $748,000 reflects an 8.75% yield on the purchase price.
The sale is the result of a long relationship with the vendor, who initially purchased the site from Pracy in August 2002 who then leased the buildings to its current tenants. Pracy's involvement with ING (previously Urbus) developed following their sale of the KPMG building in Hamilton last year.
With his knowledge of Te Rapa property and the requirements of the ING property portfolio he knew it would be a good fit when the vendor approached him with the proposal to sell the Te Rapa site.
Pracy has been involved in a number of retail developments in and around Hamilton and has developed the reputation for providing a service that extends beyond brokerage. "I have been involved in 5 or 6 retail developments where I have sold the land to start with, leased the buildings, and then sold the development at the far end if this has been required. I have done it for long enough to think a bit like a developer, finding land that looks promising and then working out the margins to produce a proposal that has some substance behind it including expected rentals and overall profitability."
Commenting on local retail market trends, Pracy says that there has been a large movement to bulk retail from the city fringe to the Te Rapa area and that this has only really taken place over the last 24 months. There is also prominence, and a lot more activity, in suburban convenience retailing - centres that are a mix of large format stores and smaller shops. Currently he is involved in retail centres in Te Awamutu, Horsham Downs and Hillcrest.
"Hamilton CBD will undergo some changes and there is a lot of talk of the council looking at plans to rejuvenate the centre. Retail in town will remain strong since it is small format and provides a pleasant shopping environment but it needs attention in terms of pedestrian flow and traffic access."