Modern Hawkes Bay building with multiple tenancies

12:00 PM Wednesday September 23, 2015 Colin Taylor

The modern high profile Hastings commercial building at 729 Heretaunga St.

A modern high profile Hastings commercial building with prominent main street frontage and four split tenancies across a range of industry sectors has been placed on the market for sale.

The two-story building occupies a prime corner site on the intersection of 729 Heretaunga St and Grays Rd and is being promoted as an investment opportunity with potential added-value avenues.

“Its multi-angled design and construction make it one of the most modern in the commercial and light industrial strip linking Central Hastings with the city’s industrial zone,” says Paul Garland of Bayleys Napier who is marketing the building for sale at auction on October 9 by Bayleys Napier.

Sitting on 1268 square metres of freehold land, the 623 square metres building generates annual rental returns of $92,881 from the following four tenants within the property are:

  • Education provider Te Wananga o Aotearoa which has a lease generating $41,353 per annum and expiring in 2017 with one two-year right of renewal. Te Wananga occupies 215 sq m of space and has five allocated car parking spaces. The Hastings Te Wananga campus is one of 92 such learning sites nationwide offering a range of certificate, diploma and degree courses in business, trades and vocations.
  • Finance company CentraCorp with a lease earning $22,150 annually and expiring in 2018 with two two-year rights of renewal. CentraCorp occupies 70 sq m of space and has two allocated car parking spaces. The finance company operates in the motor vehicle sector and has been an anchor tenant in the building since it was constructed – choosing to be close to the numerous car sales yards trading along Heretaunga Street.
  • Agri’ product marketing firm Valagro on a lease generating $19,000 per annum and expiring in 2017. Valagro occupies 123 sq m of space and has four allocated car parking spaces. The Hastings office of the Italian-based company is one of 12 such branches around the world. The company is produces and marketing bio-stimulants and fertilisers.
  • Accommodation marketing organisation Host Accommodation with a lease expiring in 2016 that generates annual rent of $12,200. Host Accommodation occupies 67 sq m of space and has one allocated car parking space. The business is a conglomerate of motels, motor inns, and motor lodges located from Kerikeri to Invercargill – with the marketing and administrative services running from the Hastings-based head office.

Garland says the internal configuration of the building allows for all four tenancies to co-exist independently of each other.

“The building has three separate entrances – with Valagro and Host Accommodation sharing a central foyer space leading into their respective locations,” he says.

“From a long-term or development perspective, the internal floorplates of the individual tenancies could be easily reconfigured into three, two or even one single entity.”

729 Heretaunga St, Hastings - interior.jpg

A portion of the office space within the Heretaunga St property.

However, Garland says the split tenancy business model for the property delivers a low-risk investment strategy.

He says the core structure of the 1980s-built premises was added to in the early 1990s and is now certified to 73 per cent of New Building Standard (NBS). The building’s timber framed bracing walls are held in place by steel support trusses and encased in fibre cement cladding with aluminium window joinery.

“With 38 metres of frontage onto Heretaunga Street and 35 metres of frontage onto Grays Road, a new owner could look at increasing the property’s revenue potential by the installation of advertising hoardings or billboards,” Garland says.

“The Hawke’s Bay’s commercial office and industrial property markets – outside of premises involved with the primary productive sector – has remained relatively subdued for the past three years, offering some good investment returns with yields averaging between eight to10 per cent.

“This has led to increased vacancy rates among poorer grade commercial premises in Hastings. This property however, with its established tenancies benefiting from competitive per square metre leasing rates at a prime location in a well-maintained building, has certainly bucked that trend,” Garland says.