‘Ultimate landlord-friendly’ Auckland property
The 2696sqm store leased to Nick Scali Furniture at 54 Mt Wellington Highway. Photo / Supplied
The Mt Wellington property housing the first New Zealand store of Australian publicly listed upmarket furniture retailer Nick Scali (ASX NCK) is for sale.
“The property comes with the ultimate landlord-friendly lease,” says John Davies of Ray White Commercial who, with fellow Auckland director Nigel Ingham, is managing the set-date sale of Unit D, 54 Mt Wellington Highway closing at 4pm on Thursday May 24.
“It’s Nick Scali’s flagship store in this country and it’s going gangbusters for them,” Davies says.
The Auckland store is one of a number in the Harvey Norman Centre with its neighbours including well-known brand names like Rebel Sport, Harvey Norman, Briscoes, Para Rubber, Number One Shoes and Bike Barn. There are only a few owners in the tightly held centre.
The large property started trading as Nick Scali Furniture late last year following a significant high-quality fit-out by the firm stamping its commitment to the site. The store has a total rentable area of 2696sq m including a main trading area of 1939sq m plus office and amenities, mezzanine, storage, enclosed loading dock and plenty of parking within the centre.
Davies says Nick Scali started an eight-year lease in December 2017 with two six-year renewal options paying $525,669 net annually plus GST.
He says the strength of the lease and the quality of the tenant speak for themselves.
“This is an ideal passive investment property with growth built into the lease and the tenant paying all outgoings.
“The rent commenced at around $525,000 but each year it rises by 2.5 per cent, so by the time a buyer settles later this year, the rent will have gone up another $13,000.
“Over the initial eight-year lease term, that represents a rent increase of about $100,000 - just by doing nothing.”
Strategically located on busy Mt Wellington Highway just off Ellerslie-Panmure Highway, the Nick Scali store is close to the huge Sylvia Park retail development and business park.
The flagship Nick Scali Furniture store has a high-quality fit-out. Photo / Supplied
Ingham says supermarket operator Foodstuffs recently bought a neighbouring property at 80 Mt Wellington Highway. “And Progressive Enterprises, which operates the Countdown supermarket chain, has purchased the 2.3ha former Moyes Panmure Holden dealership site just up the road from the Nick Scali premises.
“So, that’s two big supermarkets in operation either side of the Harvey Norman Centre. With interest rates where they are, this property investment is as secure as it gets.”
An indication of the strength of the tenant covenant was a statement by Nick Scali Furniture’s managing director Anthony Scali announcing the company’s record half-year net profit in February 2018.
Scali said the new Auckland store had been the best performing new store in January in respect to sales orders.
“Positive feedback from consumers is encouraging and suggests, as expected, the Nick Scali brand will fill a void in the New Zealand furniture industry segment,” Scali said.
The Mt Wellington Highway store was one of six opened in the second half of 2017, along with five stores in Australia — three of those in Queensland.
More Nick Scali stores are expected to open in Auckland, Waikato, Bay of Plenty and Wellington in 2018.
Founded more than 50 years ago, Nick Scali Furniture is one of Australia's biggest retailers and importers of quality furniture.
Every year, according to the Nick Scali website, the company imports more than 5000 containers of leather and fabric lounges as well as dining room and occasional furniture.
Nick Scali Furniture was one of several big-name brands to launch in New Zealand in 2017.
Others include H&M, Zara, Tiffany & Co and Australian retailer Chemist Warehouse.
John Davies, Ray White Commercial.