Childcare property 'a rising star'

Rising Stars Lynfield occupies a large corner site at 210 White Swan Rd - identified by a red border. Photo / Supplied

A childcare centre property licensed to care for 54 children is for sale in the Auckland city fringe suburb of Lynfield.

The large facility — comprising a 333sqm building on a 1011sq m corner site — is being sold by JLL, via an expressions of interest campaign, closing at 4pm on July 5.

Agents Kevin Reardon and Alex Wefers say the property will provide the new owner with a stable, passive income for the coming four years. It is now returning $121,000 per annum net, or $43 per child per-week.

"This indicates there may be some rental upside at market rent review in 2022. In the meantime, the lease provides fixed annual increases," says Reardon.

He adds that having operated under the same management and business name since 2004, the tenant Rising Stars Lynfield has integrated fully into its community and neighbourhood.

"With 14 years' industry experience at this location, this tenant has the right to stay for a further 16 years until 2034 if all rights of renewal are exercised," he points out.

Rising Stars has two centres under the same management, the second being in Henderson.

Wefers believes an astute investor will instantly recognise the upside potential of the property.

"As a business, a childcare centre has good, stable cashflow. The location allows the investor to participate in and benefit from Lynfield's growing appeal and rising property values," he says.

The two-level structure built in 2000 has concrete flooring, fibre cement wall claddings, timber framing and a steel roof.

It is boomerang shaped, which enables all activity areas to open to an enclosed play area.

The lower level is subdivided into three main children's activity areas and caters for different age groups. It also includes a resource room, laundry, kitchen, first aid room and toilet facilities. The upper level provides a staff break room and administration office. There are 13 car parks on the property.

"This property is zoned Business Neighbourhood Centre and along with allowing for higher density, this allows a variety of commercial and residential activities, which future-proofs this location," says Reardon.

"The Government has committed to further investment in childcare and early education, which adds to the security of this investment. The childcare sector remains highly sought after by investors and is tightly held by those who already have ownership."

According to JLL research the number of children aged 0-4 in Lynfield and the surrounding area will increase from 2770 in 2017 to an estimated 3260 in 2028, an increase of 490 children (18 per cent).

"Our research tells us there are about 952 children attending childcare across 23 facilities within a 2km radius of this property," says JLL head researcher Tom Barclay.

"With 54 children the subject property is substantially larger than the 41 average for this area."

Barclay expects the overall number of children in childcare to increase, especially following the recent budget announcement which has targeted increased access to early childcare education over the next four years.

The agents say being located on the southern side of White Swan Rd, on the corner of Gilletta Road, the property is in a prime position. It is surrounded by mainly residential properties has ample street frontage to both White Swan Road and Gilletta Road.

The suburb is well supported by local schools, including Lynfield College, which is a short walk away. Also only a walk away are a number of reserves with coastline to Manukau Harbour. The property sits right on the juncture of three suburbs, Lynfield, Mount Roskill and Blockhouse Bay.

"All three suburbs have experienced a significant rise in capital values over recent years. Access to Auckland CBD takes about 12 minutes via suburban roads. But this has been vastly improved by the completion of the Waterview Tunnel," says Reardon.