KEY POINTS:
An East Tamaki property that houses the world's largest manufacturer of home heating appliances has been put on the market.
The Glen Dimplex Australasia base at 38 Harris Rd and 65F Crooks Rd is to be redeveloped for the company and when finished will provide a new owner
with a passive income.
The property will have about 6070 sq m of manufacturing, warehouse and office space on the 1.03ha site across three titles and is for sale through Colliers International industrial brokers Greg Goldfinch and Nigel Ingham. Offers close on November 29.
North Shore-based developer Aubrey Edward Group bought the property in August from a private investor with the intention of redeveloping the site.
Shortly after, the property's tenant, Metal Fab Industries, sold 65 per cent of the company to Ireland-based Glen Dimplex Group. The rest of the shares were retained by Metal Fab Industries management and the company now trades as Glen Dimplex Australasia.
Metal Fab Industries specialised in manufacturing Masport and Logaire appliances and was squeezed for space at the site. It had been a tenant for more than eight years, after starting in one building and gradually expanding as the business grew. The site now contains four buildings.
While many companies manufacturing similar appliances have moved production to China or other countries with cheaper costs, Metal Fab Industries retained its operations in New Zealand because its skilled workforce could meet the high level of quality required and carry out development work.
With two years to run on Metal Fab Industries' lease, Aubrey Edward directors Dean Whimp and Tom Tuke worked through options for the expansion and refurbishment of the site with the new owners.
Aubrey Edward is adding another 1000sq m of manufacturing and warehouse space to leave three buildings on the site, tidying up those buildings and redesigning the entranceway to increase car parking.
"Glen Dimplex is able to consolidate all its manufacturing on to one site for the future," says Aubrey Edward director Dean Whimp.
"It's been a great outcome for Glen Dimplex and us, as relocating the company would be difficult and costly. Development sites of this size and nature are hard to find.
"The company has signed a new eight-year lease, which kicks in on practical completion of the redevelopment work, expected to be early next year," says Aubrey Edward director Tom Tuke.
The company has also taken two four-year rights of renewal and the $598,000-a-year rent will be reviewed biennially to market rates.
There are also rental guarantees from Glen Dimplex and the local directors.
As well as manufacturing the Logaire and Masport wood fires, the company does contract manufacturing for brands such as Metro and Jayline. Its brands are distributed through 100 New Zealand heating stores. Glen Dimplex Group also manufactures its own brands, which will be distributed in Australasia.
Glen Dimplex has about 130 staff in Australasia and an annual turnover of $30 million. Worldwide, it employs 8500 people and has an annual turnover of about $3 billion.
Aubrey Edward is now selling the property as an investment.
"It has three titles and one tenant in East Tamaki and that's a rarity," says Goldfinch.
The property has two frontages, on Harris and Crooks Rds, dual access and gives easy access to the Southern Motorway's Highbrook interchange.
Goldfinch says the property will appeal to family trusts, syndicates and high-net-worth people as it is difficult to find big buildings with a multi-national tenant leasing the entire site.
"This is a classic industrial real estate investment opportunity," says Ingham.
"Aubrey Edward Group's expansion and refurbishment of the property is a good example of a brownfields upgrade - an emerging trend as land prices rise," says Goldfinch.
"Building a new shed on land that costs more than $300 a metre just isn't viable for developers these days."
Ingham says the property will be a sought-after an investment.
"There has been strong demand for both prime and secondary industrial properties from owner/occupiers, investors and tenants, particularly in East Tamaki, over the past 18 months.
"This has been reflected in Manson Developments' sale in June last year of half of an 8ha site on the corner of Harris and Crooks Rds for $13.5 million, an initial yield of 8.5 per cent.
"Manson's subdivided the rest of the site into 10 individual lots and they were sold by Colliers International within six weeks to owner/occupiers and developers for $290 to $350 per square metre. There have been recent on-sales of between $330 and $415 per square metre."
Titles for these properties are expected in January next year and development of new warehouse distribution centres, business parks and small office warehouse unit developments will start shortly after.
Goldfinch says several recent East Tamaki sales have achieved significant prices.
The Fisher & Paykel Finance building on Highbrook Drive sold for $13.5 million, a yield of 7.6 per cent. Chrisco's building on the corner of Accent Drive and East Tamaki Rd sold for more than $11 million, a 7.3 per cent yield.
"There is still a huge amount of investment money looking for a home in the industrial market," he said.
"Some estimates put it as high as $2 billion. Demand far outweighs supply, which, in turn, continues to apply pressure to yields."