Private buyers bag commercial assets

Architecturally designed offices within a high-stud former warehouse at 22 Garfield St, Parnell, return $108,000 a year. Photo / Supplied

Leased-up commercial properties in good locations around Auckland are proving a magnet for private investors and syndicates in a "still tough" market, say directors at CB Richard Ellis, who are marketing four diverse properties in the company's Going Going Gone portfolio that are good examples of the trend .

"Private investors bought more than 70 per cent of commercial property assets for sale in the past year," says Jonathan Ogg, CBRE's investment sales senior director. "The majority of active buyers are private with the remaining transactions going to mainly syndicates and most of the buyers are after well-located and well-leased assets."

Ogg says sales volumes have improved slightly over the last year and Auckland has shown the way. "Lower-priced assets are still in great demand by cashed-up investors, who are taking advantage of favourable relative returns."

The properties being offered by CBRE that are expected to attract strong private-buyer interest include a stand-alone fashionable Parnell architects' office, a two-tenant retail investment in Milford, a Flight Centre premises at Meadowbank Shopping Centre and a fully-tenanted Mairangi Bay office building.

Ogg and Dominic Ong, CBRE's private client group national director, are selling a Parnell standalone, single-level property tenanted by Pattersons, one of Auckland's best-known, award-winning architectural firms.

The single-level 395sq m building - with architecturally designed offices inside a high-stud former warehouse at 22 Garfield St, Parnell - returns $108,000 a year for ground-floor offices, two small mezzanine floors and six carparks.

"Pattersons has been a tenant for about eight years and has converted the warehouse to funky open-plan offices for its architectural practice," says Ogg. "The polished concrete floors and high standard of fitout provide a complete contrast to the unprepossessing exterior."

Pattersons lease runs until 2012 and the firm has a right of renewal of just more than two years. Ogg says under the property's mixed-use zoning it has the potential to be converted to a showroom or apartments at a later date.

The property sits on a 450sq m site fronting to Garfield St and has pedestrian access from Farnham St along a right of way. "The property is exactly the type of investment buyers chase," says Ogg. "It is a solid building that has future conversion potential, a good tenant, and sits in a suburb close to the city that attracts small to medium high-end businesses. Properties of this calibre for sale are few and far between as owners tend to keep them as long-term investments."

Ogg says plenty of interest is being shown in the property from astute investors and it will auctioned on March 30.

On the North Shore, a bigger a three-level office building at 4 Orbit Drive, Mairangi Bay, is for sale by private treaty closing on March 31 through CBRE broker Andrew Bartley.

A private investor bought the A-grade 962sq m Northbridge-developed property when it was built three years ago at Apollo Technical Office Park, which is within Interplex business park.

The building has three freehold strata titles consisting of basement warehouse/storage, two office levels and 21 carparks. Bartley says there are four tenancies fully leased to Konica Minolta, Seneca Group and KML Retail Management Services, returning a total yearly income of $196,452.

"The owner has his 160sq m office, 84sq m of basement storage and seven carparks within the building and he will guarantee the rent of $64,120 per annum for six months or leave it empty for an owner-occupier."

Bartley says the property offers investors multiple tenancies giving a good spread of income, rental growth potential, two new leases, quality fitouts throughout and a building engineered to provide excellent services to tenants at a location that is second to none. "This is a quality property in the heart of a nine-building professional office park.It is not often there are multi-tenanted buildings for sale on the North Shore. It is easier for investors to buy a single building with a single tenant. A multi-tenanted building is a safer risk and sought after because leases and income are spread.

"This building, in particular, has created strong interest because it is an island property at the eastern end one of the North Shore's top business parks.

"It is surrounded by other quality buildings with top tenants, has superior fitouts and is elevated giving views over the park. "The property is well-located for easy motorway access. It is a no-brainer as an investment for serious commercial property players or for an owner-occupier to reap the benefits of an income from their business premises."

Further north in Milford CBRE North Shore brokers Simon Farland and Brian Paulin along with Dominic Ong from the city office are marketing a two-tenant retail investment at 1 and 1A Shakespeare Rd.

FruitWorld and Configure Express Gym tenant two high-profile, single-level stand-alone buildings on a freehold 1400sq m site that is for auction on March 30.

The property, in two titles, sits on the traffic light-controlled intersection at the northern end of the Milford shopping strip on the corner of Shakespeare and Kitchener Rds and the bypass through to Beach Rd.

The fully tenanted buildings were extensively remodelled since they were erected in the 1970s and now return $165,000 a year.

Configure Express Gym occupies the bigger 283sq m building on an eight-year lease and FruitWorld, the smaller 210sq m property, is on a two-year lease with multiple renewals. There is extensive carparking in front of both buildings.

Farland says the high-profile Milford corner is a rare retail investment. "The location, with its extremely high traffic count, is one of the best on the North Shore.

"The passive income, proximity to the North Shore medical precinct and an allowable 9m height under the North Shore City Council's Business 2 zoning, means this property is aligned for re-development by a future owner. This is definitely a property where redevelopment will add quite a bit of value."

Jillaine Murray and Dominic Ong, who are marketing Flight Centre's leased premises at Meadowbank Shopping Centre, describe the property as one of the simplest and hassle-free investments to come available for some time. "The freehold unit title shop is immediately inside the main entrance doors of the shopping centre next to Foodtown and is regarded as being in a strategic location," says Murray.

Flight Centre has an eight-year lease on the immaculately presented property and pays $52,500 net a year in rent. Constructed in the 1990s, the Meadowbank Shopping Centre is a busy retail complex and Flight Centre's premises have a top-line fitout.

Murray says the property is a good entry point into the commercial property market for a first time investor.

"It is affordable and one of the simplest property investments on the market." It will be auctioned on March 30.