Harvey Norman distribution centre up for sale

Tuesday 4 December 2018

A Harvey Norman distribution centre that services most of Northern Tasmania will be auctioned next week, and agents say it’s got a major advantage over almost any other retail warehouse in Australia.

The industrial building at Invermay stands at 2,479 sqm of space on a 5,843 sqm just off the East Tamar Highway, with a secure lease to the retail giant until 2023, with options to extend.

But it’s the property’s proximity to the retail store it services that makes it an exciting investment, according to agents from Knight Frank and Burgess Rawson.

Positioned about 1km from the company’s Launceston CBD store, being so close allows Harvey Norman to utilise more space on its retail floor, with the warehouse used to hold the stock that would normally need to be kept back-of-house at its outlets.

Knight Frank Launceston director David Webster says that Harvey Norman is likely to wish to retain the warehouse in the long-term, given the savings it achieves per square metre versus its retail store.

“The market rent for Harvey Norman’s CBD store would be around $200 per square metre. With close proximity to their warehouse (where they pay just $92 per square metre), this offers the business a huge advantage over their competitors,” Webster says.

“Instead of paying full retail rates for back-of-house storage (to the rear of the retail store), they can move some of the inventory to the warehouse and add more retail space to make additional revenue.”

Burgess Rawson director Jamie Perlinger says warehouses that are crucial to retail supply chains are in increasing demand.

“Putting aside the retail twist on this particular asset, this year we have witnessed a spike in enquiry for quality industrial assets. E-commerce is on the rise and retailers are looking for warehouses that are close to major transport links and CBD areas,” Perlinger says.

“Everything that is sold online needs to go through a warehouse before it is delivered to the customer. In some case investors are purchasing multiple industrial assets as they are considered safe investments with solid returns. We are seeing new investors turning to the sector as they look to diversify their portfolios in a changing retail environment.”

The property was last sold in June 2016, has a current net estimated rent of more than $253,000 annually and is surrounded by other major retailers including Bunnings Warehouse, Officeworks, JB Hi-Fi and McDonalds.

It will go to auction on Wednesday, December 12 at Burgess Rawson’s final investment portfolio auction of the year at Melbourne’s Crown Casino.

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Written by Adrian Ballantyne, Real Commercial

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