Oamaru PlaceMakers for sale and leaseback

4:15 PM Tuesday May 2, 2017 Colin Taylor

The new Oamaru PlaceMakers is designed to the same high standard as this one in Lower Hutt. Photo / Supplied

In central Oamaru, a new bulk retail building is to be constructed for PlaceMakers which is now offering it for sale and leaseback to a prospective new owner.

Savills industrial brokers Ben Dwan and William Wallace are marketing the freehold property, at 23 Humber St, for sale to investors, by deadline private treaty closing on May 11.

PlaceMakers currently occupies older buildings on the site, which will be deconstructed in stages and replaced with a new, purpose-designed retail store, expected to be completed in mid-2018.

The national hardware chain will then lease the property back from the new owner for an initial 12-year term, with rights of renewal.

Dwan says the chance to own a new retail property in a prime location in a thriving regional town, with a possible total lease term of 30 years on offer if all rights of renewal are exercised, is expected to appeal to passive investors.

“This is an excellent opportunity for investors to secure a long-term property holding in a sought-after central location in Oamaru, at a time when the national retail market is gaining strength. With the extra-long lease to a reputable national occupier, and also being new and purpose-designed, it offers the full package when it comes to the core fundamentals of investor demand.”

Wallace says PlaceMakers is well established on Humber St and is committing to the site for an extended term.

“The Oamaru site is a strategic part of PlaceMakers’ national network of stores, with the chain having a longstanding presence at the site. The store’s operations at this location have been so successful they want to continue occupying the property into the future.”

Matthew Grainger, distribution development director for Fletcher Distribution Ltd - the retail trading arm of Fletcher Building - says the completed development will be of the same high standard as PlaceMakers’ other new stores, such as those in Kaiapoi and Lower Hutt.

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An artist’s sketch of Oamaru’s planned PlaceMakers at 23 Humber St. Photo / Supplied

“This will be a complete redevelopment of the site, with the new building designed to provide our customers in Oamaru with a new, state-of-the-art hardware retail experience.”

When completed, the new store will have 2609sq m of floor area, along with a 2306sq m yard and 65 on-site car parks. The building will include a main showroom, drive-through warehouse and mezzanine offices

The demolition and construction project will be carried out in planned stages, to enable PlaceMakers to continue uninterrupted trading for the duration of the development.

The initial annual net rental for the new property will be $324,000 with rent reviews built into the lease providing the potential for income growth.

The property is located in a Business 3 zone, which is a Mixed Business zone providing for light industrial, service, retail, wholesale and office activities.

The 6575sq m site has been continually occupied by PlaceMakers and its predecessors for 139 years, says Dwan.

“There has been a timber merchant on the property since 1878, when Invercargill-based sawmill McCallum and Company opened a timber yard at the property,” he says.

The original timber yard was rebuilt after a fire in 1898. In 1962, Fletcher Holdings became the major shareholder of McCallum and Company and in 1967 the company name was changed to Fletcher Merchants.

In 1972 a joinery factory, machine shop, hardware shop and offices was established on the site and in 1982 the operation’s name was changed to PlaceMakers.

Oamaru has a population of 13,850, making it the third largest town in Otago, behind Dunedin and Queenstown, says Wallace.

“Oamaru is a thriving provincial centre with a growing economy, which is prompting investors around New Zealand and overseas to make inquiries about buying property there,” he says.

PlaceMakers claims to be New Zealand’s largest supplier of building materials and hardware, employing over 2,100 people. Its 58 stores from Kaitaia to Invercargill carry over 74,000 product lines and the company also manufactures frames and trusses from eight manufacturing plants nationwide.

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Ben Dwan, Savills.