Ideal commercial investment

Forrest Funeral Services will lease the building from the buyer for 24 years. Photo / Supplied

Being marketed as "the ideal passive investment", an Orewa funeral home and former church will be auctioned later this month by CB Richard Ellis.

Forrest Funeral Services has occupied the building at 39 Riverside Drive for more than a decade and is selling it on a sale and leaseback basis.

If the property is sold, Forrest Funeral Services will sign on settlement an eight-year lease that, with rights of renewal included, will run for a further 24 years.

The freehold, stand-alone, immaculately maintained and presented 209sq m building on a 1224sq m site is being marketed by CBRE brokers Jillaine Murray and John Bedford, and will be sold at auction on February 23.

"This is a tidy long-term solid investment for a committed buyer," says Murray. "Likely to sell at under $1 million, this is an ideal passive entry level investment for people considering commercial property for the first time, or for investors wanting to add to their portfolios.

"The building, erected in the 1970s, was previously used as a church and had been constructed to a robust standard using concrete walls and steel beams."

The property now comprises a reception area, chapel, waiting room, offices, modern kitchen and bathrooms, a small canopy over the driveway and main entrance foyer as well as a pleasant outdoor courtyard that is used for serving refreshment before and after funeral services.

Incorporated into the fitout is a mix of tiled and carpeted floors, plasterboard walls and ceilings, surface mounted lights and a number of heat and air-conditioning pumps.

At the rear of the property there is a large, sealed off-street parking area and if more parks are required free parking is available at Centreway Reserve, which provides a pleasant outlook immediately across the road.

"It is a generic building that has no specialised fitout. There are no crematorium or embalming facilities on site," says Bedford. "The premises are used for funeral services and administration only.

"From an investor's point of view this is the best type of property because it can be adapted to suit any tenant's requirements. At a later date it could be used as a small-scale residential development site as an alternative use."

The property is within a high-density residential neighbourhood and is surrounded by single-level houses. Although it sits in a residential zone, the property has a Rodney District Council land use consent to operate as a funeral home.

The property is on the northern side of Riverside Rd, about 500m from Orewa township and a short distance from Centreway Rd, a main arterial route connecting to SH1.

Orewa has long been considered a retirement township attracting people who like living on the flat and having ready access to a full range of shops and services and the coastal lifestyle.

Murray says the market for small commercial properties in Orewa has resisted the decline in values in the greater commercial property market.

"Yields have remained firm by comparison to the wider market because of Orewa's coastal location and the development potential many properties offer."

Bedford says private investors have been active in searching for well presented and tenanted properties in good locations that offer strong cash flow security, particularly as interest rates are low. There is always strong demand for investment properties under $1 million.

"This property has a new eight-year lease with three eight-year rights of renewal and is returning $56,900 a year net. Rents in Orewa have not dropped and are expected to remain stable as stock is tightly held and there are few vacancies."