Big spenders back in town

Maritime Tower went for $62 million. Photo / Mark Mitchell

More commercial property is being sold, deal sizes are rising and investment syndicates are big spenders.

Zoltan Moricz of CB Richard Ellis has published his MarketView investment transaction monitor for the half-year to June and found the market sparking again.

A resurgence in big deals and the rise of syndicates as the second-largest purchaser after private investors and owner/occupiers keen to enter sale-and-leaseback deals were some of the trends he noted.

Listed property trusts and managed funds have been responsible for nearly half the deals by value in the first half of this year, Moricz found.

The value of commercial and investment property sales is up $205 million.

"In the first half of 2009, for sales above $5 million each, sales totalled $736 million in the three major centres in New Zealand. This is up 39 per cent from the second half of 2008 but is down from the half yearly average of the previous five years of $1.26 billion.

"Auckland experienced a pickup in total sales values in the first half of 2009, increasing from $381 million in the previous six months to $456 million. The value of sales in Auckland historically makes up around three-quarters of the combined value in the three major cities, so therefore has a large bearing on nationwide trends."

The largest deal in Auckland this year was the $41.5 million Forsyth Barr Tower sale in Shortland Street to Robt Jones Holdings.

The $36 million sale of Fletcher Building's head office at 810 Great South Rd, Penrose was this year's second-largest Auckland deal. Fletcher sold the property to Tauranga developer Carrus Corporation. Fletcher House, which is Fletcher's head office, and a number of other office and industrial buildings on the 2.2ha site were sold.

New Zealand's largest property deal this year was the $62 million sale of Maritime Tower at 10 Customhouse Quay by Valad Property Group to a private investor. Kiwi Income Property Trust's $26.3 million sale of BP House on Customhouse Quay for $26.3 million was Wellington's second-largest deal.

Moricz predicted the last half of this year would be marked by some large deals and rising sales volumes. The market was moving out of its trough, he said.

Chris Dibble, Jones Lang LaSalle's research and consulting manager in Auckland, found commercial tenants have the upper hand. Prime Auckland rents are down 9 per cent, landlords are being forced to be more flexible and a leasing incentive of one month's free rent a year is "not uncommon and likely to increase", Dibble said in the Houseview Pulse Update.

Shop vacancies are around 5.5 per cent in Auckland and Wellington, well up on the 2.9 per cent and 4.8 per cent in December. Shop rents are down 6 per cent in both cities.

Major Auckland shop deals lately include Australian retailer True Alliance's leasing of the Deloitte Tower on Queen St and Dick Smith Electronic's leasing of refurbished space in the ground floor of AMP NZ Office Trust's building at 21 Queen St.