Retail activity and investment prospects enliven bidding
KEY POINTS:
Manukau City addresses attracted some of the fiercest bidding and the highest prices at Bayleys Total Property auction of commercial and industrial properties.
The highest under-the-hammer price of the day was $3.97 million for a 2963 sq m warehouse and office building on just under half a hectare of land at 20 Brigade Rd, Airport Oaks.
The property is tenanted by Customs on a nine-year lease until July 2011, with one right of renewal for six years. It sold at a 6.8 per cent yield on its annual net rental income of $269,700.
Bidding started at $3.1 million and increased rapidly to $3.85 million, when the auctioneer called for $10,000 increases followed by $5000 and $2000 increments.
A $1000 raise in the bidding finally secured the property at just under $4 million.
Bayleys Manukau's Mark Pittaway said the property's strategic location on a large amount of land in the popular Airport Oaks precinct, coupled with its government tenancy, were the main reasons for such competitive bidding.
All up, more than $35 million of properties sold throughout the North Island at Bayleys' Total Property auctions.
Attracting strong competition on the auction floor were two retail units in The Hub bulk retail shopping centre off Ti Rakau Drive in Botany Downs.
A 485 sq m corner unit was sold by James Chan and Stuart Bode for $2.02 million at 6.6 per cent yield on a new six-year lease to Curtain Supermarket. The retailer has moved into space left vacant by Early Settler, which has relocated to larger premises in The Hub.
There was also strong bidding on a 1128 sq m unit in The Hub, producing net rental income of $309,900 a year from three tenants, including Resene Paints.
The unit was passed in at $4 million but was sold post-auction by Chan and Bode for $4.08 million at a 7.5 per cent yield.
Smaller investors competed strongly for the first offering of the day, a 397 sq m building housing two tenants on a prime corner site at 32c Lambie Drive, Manukau which went for $680,000, at a 7.5 per cent yield, through James Devlin and Neville Orpen of Bayleys Manukau. Further south, a 3540 sq m unit housing two retail shops and one office tenant in the Southmall Shopping Centre in Manurewa sold for $2.41 million before the auction. Marketed by Dominic Ong and James Devlin, it is bringing in a yearly net rental income of $278,865.
Bayleys Manukau's commercial and industrial sales manager, Dave Stanley, said last week's auction attracted one of the biggest crowds ever seen at a Bayleys Total Property auction, with good bidding on most offerings.
Stanley says top quality properties continue to attract plenty of interest and there is a waiting list of buyers for well located investment offerings with high profile tenants. Retail properties are particularly popular.
However, he says the market is definitely softening for second-tier properties, with yields starting to push out noticeably and double-digit returns starting to reappear.
A combination of higher interest rates and a slowing economy has make it more challenging to sell vacant buildings, although good sales of top-tier properties are still being made in this sector.
Jane High, of Bayleys Manukau, in conjunction with Stuart Bode and Paul Dixon, sold a vacant 2887 sq m coolstore, warehouse and office building on 9596 sq m of land in Crooks Rd, East Tamaki, which featured in Bayleys August Total Property portfolio, for $4.06 million.
Formerly the site of Fresh Distribution, it included 1877 sq m of high and medium-stud chiller storage space coupled with 634 sq m of attractive office space.
It was bought by a food processing and importing company.
Bayleys has also sold a vacant 2140 sq m bulk retail outlet in sought-after Ti Rakau Drive for $3.7 million.
Selling vacant for $1.02 million at last week's auction through John Algie and Dave Hookey, of Bayleys North Shore, was the former Westlake private hospital in Karaka St, Takapuna. Set on a 1639 sq m site, with 470 sq m of buildings, it has resource consent in place for a childcare centre for 78 children.
An unoccupied 201 sq m ground-floor unit in a new office building at 95 Ascot Ave, Greenlane, sold post-auction for $1.01 million. It was one of two Greenlane properties marketed by James Chan and John OBrien, of Bayleys Auckland Central, to sell at the Total Property auction.
A 680 sq m two-level building on a 1012 sq m site at 217 Great South Rd sold under the hammer for $2.25 million.
The upstairs floor is occupied and the property is producing net rental income of $57,906 a year.
The lowest yield at the auction was 4.9 per cent for an ANZ bank building in Victoria Rd, Devonport, which fetched $2.22 million.
The ANZ has been occupying the 283 sq m two-storey building for 30 years and has just exercised the first of three three-year rights of renewal. Clint Barber, who marketed the property with Lyle Flood, says the property is having a rent review and annual rental income will increase to at least $108,290.
Selling at close to $450 per sq m, with holding income of $50,400 per annum, was a 2021 sq m corner site, zoned Business 6, in Tui St, Otahuhu which sold before the auction for $988,000 through Rob Farmer and Shaun Paterson of Bayleys Manukau. It houses 233 sq m of workshop buildings leased until March next year.
Selling before auction for $1.21 million at a 7.3 per cent yield through David Young and James Chan was a car yard on a 1654 sq m site at 297 Great South Rd. It has a six-year lease from June this year to VSP Cars.
A 424 sq m two-level office building at 361 New North Rd, Kingsland, with short-term leases to two tenants, marketed by Michael Grainger of Bayleys Auckland Central, sold for $1.45 million at a 6.8 per cent yield.
Bayleys is at present looking for properties for its first Total Property portfolio in February.
