Gisborne unit leased to hair salon a high earner
An interior view of the Gisborne unit for sale which houses a hair salon.
A commercial property that is being marketed as “generating one of the highest rental returns in the heart of Gisborne’s CBD” is for sale leased to a long-established tenant.
One of five strata title units, the property at 20 Lowe Street is part of a two-level commercial building known as the Redoubt Building and is in a block bounded by Gladstone Rd to the southwest, and Reads Quay and the Taruheru River to the northwest.
“This premises is producing a rental return of 16 per cent,” says Karen Raureti of Bayleys Gisborne who, with colleague Colin McNab, is marketing the unit for an asking price of $195,000 plus GST.
Raureti says the hairdressing business, Hairlucination, has been a tenant in the high profile building for five years. “The salon provides full hairdressing services from trims and a range of haircuts and styles to colouring, straightening and braiding. The business is open five days a week from Tuesday to Saturday with late nights on Wednesdays.”
Constructed in 1981, the 107 sq m unit is generally constructed of concrete walls and floors, aluminium windows and galvinised iron roofing.
The property generates a net annual rental of $31,200 plus GST from a lease which commenced on August 1 this year with two three-year rights of renewal. The owner pays the rates and bodycorp fees.
“The prominent position of the building coupled with its excellent rental return makes it the complete package for an owner or investor,” Raureti says.
“It is situated close to the waterfront and within the central city area which receives a high volume of foot traffic, particularly during the summer months when the region’s population swells with holidaymakers,” she says.
“A yield of 16 per cent well exceeds the average return for commercial investments in this region, and indeed around much of the country, so this sale represents a solid investment opportunity.”
Raureti cites recent figures from Interest.co.nz showing residential rental yields have declined in Auckland, Hamilton, Wellington, Nelson, Christchurch and Queenstown. “These have dropped to drop below five per cent in most parts of Auckland and under six per cent across much of the rest of the country,” she says.
“According to one business publication, the commercial investment market numbers to March 2015 showed annual total returns for all office, industrial and retail properties were 11.7 per cent.”
The unit at 20 Lowe Street forms part of this Gisborne retail block.
Raureti says the property is zoned Inner Commercial within an area covered by a continuous street facade which seeks to protect the existing architecture and is subject to criteria regarding any alterations or rebuilding.
An extensive list of chattels is included in the sale including the complete salon fit-out which features lights, mirrors and benches, basins, salon chairs, display cabinets, washing machine and drier, chairs and tables, computer and software, hairdryers, heaters, microwave, fridge and stereo.
Raureti says a $120 million transport package for Gisborne, announced by the New Zealand Transport Agency in June this year, is expected to boost the region’s economy.
“The work will include creating an additional 20 kms of roads, improvement to bridges and extensive maintenance of the district’s roads over the next three years. The investment aims to help keep people and freight moving and to fulfil the economic potential of the region.
“This initiative will further drive economic growth to this region which already benefits from a significant tourism market and profitable local businesses.”
Raureti says a new owner will take over a unit in a prominent Gisborne location tenanted by a built-for-purpose business with a well established clientele.
“All of the hard work has already been done. This is a property in a highly-desirable area with an exceptional return for a new owner and its represents a one-of-a-kind opportunity.”