Main street investment with passive income

A fully tenanted retail and office block in the heart of the prosperous Upper North Island coastal town of Tairua has been put on the market for sale.

The prominent quartet of shops and office is located in the main street of Tairua on the Coromandel Peninsula, and contains a broad range of tenancies with ample street parking immediately outside. Sitting on some 809sqm of flat rectangular-shaped land zoned commercial under the Thames Coromandel District Council plan, the four tenancies within the Main Road block in Tairua generate annual rental of $109,808 plus GST and operating expenses, and include:

• Real estate company Coromandel Beaches Realty LIMITED, trading as Harcourts Tairua, which has continuously occupied the premises for more than 16 years and is on a current lease running through into 2027
• Wash and dry laundromat CPN Laundromats on an existing six-year lease running through to 2031, with three further six-year rights of renewal
• Takeaway food shop Surf and Sand, which has continuously occupied the premises for more than 10-years and is on a current lease running through to 2027 with a further four-year right of renewal
• Casual fashionwear clothing boutique Get It On on a current lease running through to 2027, with a further two-year right of renewal

Additionally, the four tenancies pay maintenance and management (M&M) charges above their rents in accordance with clauses written into their individual leases. Those lease clauses also allow for periodic increases of the maintenance and management charges – thereby generating substantial additional income for the building owner over the term of the lease.

The land and 340sqm building at 236 Main Road in Tairua, also known as State Highway 25, are now being offered for sale by auction on March 19 through Bayleys Whitianga.

Salesperson Josh Smith said commercial property buying opportunities in Tairua were few and far between.

“Commercial property in Tairua is predominantly accommodated within a very confined envelope of just a few hundred metres along Main Road, and is therefore tightly held and rarely comes onto the market,” said Smith.

“The offering at 236 Main Road is very much a passive investment opportunity for any buyer, with established tenants in place in a high-profile location underpinned by a stable population base in an area where commercial property zoning presents a scarcity for future commercial spread, quite possibly suggesting little potential for any new commercial land to ever be developed.

“With all of the tenancies within the single-storey block very much focussed on servicing Tairua’s year-round resident population, they all benefit from the high foot and road traffic exposure emanating from 236 Main Road, where this property’s southern boundary directly adjoins Tairua’s popular supermarket and otherwise sits in the middle Tairua’s CBD with a much bigger parade of retail outlets in a tight-knit terraced configuration.”

A service lane runs behind the retail premises allowing for the delivery of products, and staff car parking. The block was constructed in the 1970s and has a solid reinforced concrete slab floor with reinforced concrete block walls minimising maintenance. It enjoys a new building standards rating of 55 percent. Each of the four individual premises within the block have their own bathroom amenities and various configurations of staff lunchrooms.

Tairua/Pauanui’s resident population now sits at approximately 3,017 people – up by 657 since the 2013 census, and is identified in the Thames Coromandel District Council long term plan as having a “vibrant town centre.”

Thames Coromandel District Council recently announced $22 million of infrastructure budget spending for Tairua to fund the construction of a new two-lane bridge in the town, replacing the current structure which was built in 1943. Construction is expected to begin later this year, with completion by Christmas 2027.

“Tairua is one of many Coromandel seaside towns, alongside the likes of Waihi Beach, Whangamata, and Whitianga, which has a really positive vibe running through it – coming from both the resident population, and those with holiday homes in the locale. This positivity vibe is very much reflected in the town’s commercial property scene – which has extremely low vacancy rates along Main Road,” said Smith.

Endorsing the proactive support of the regional economy in and around Tairua, Thames Coromandel District Council last year launched a ‘buy local’ campaign – encouraging the resident population of towns such as Tairua to support locally based businesses over out-of-town goods and service providers. The Tairua Business Association picked up on the initiative and ran a promotion to incentivise Tairua locals to keep their dollars within the immediate locale.