Further evidence the strong momentum that has been evident in the Auckland commercial and industrial property for the last two years has continued into 2016 was provided by Bayleys first portfolio auction for the year which generated strong bidding across a wide range of properties.
Bayleys senior commercial auctioneer Richard Valintine says while there were only 11 properties up for auction, with three vacant premises having sold prior, there was a very big crowd in attendance and multiple bids on most offerings.
Richard Valintine, Bayleys
"We had phenomenal, rapid fire bidding on a number of properties, with some very low yields being recorded on fully leased investment offerings while there was also very strong competition for a number of vacant and semi-vacant buildings.
"Some properties sold for well over their reserve prices and based on the strength and depth of bidding that was evident at the auction, it is clear that demand is continuing to outstrip supply for many types of properties," says Valintine. "Low interest rates have a lot to do with commercial property's popularity at present given the meagre returns provided by bank deposits and bonds.
"Low borrowing costs are also resulting in leveraged investors considering higher valued properties and they make it attractive for businesses to borrow to buy their own premises. Owner-occupiers remain very active in the market, purchasing a number of the vacant buildings that were up for auction."
561-563 Manukau Rd, Epsom.
A total of nine properties sold at or prior to the auction at a combined value of close to $20 million with negotiations continuing on other offerings that were passed in.
The property which sold for the highest price of $6,125,000, a two-level building at 34 Morrow St, Newmarket, fully leased to two tenants, also generated the most bidding with over 60 bids recorded.
Marketing agent Kate Kirby, of Bayleys Auckland office, says there were 15 parties in the auction room who had expressed an interest in bidding on the property and many put their hands up to compete for it. Bidding started at $3.6 million and the property was declared "on the market" by Valintine when it reached $4,725,000. A further 44 bids followed before it eventually sold under the hammer at a 3.55 per cent yield on its net annual rental income of $218,820 plus GST.
"This is an exceptionally low yield for an investment property but this was a pretty exceptional offering," says Kirby. "First and foremost it's very strongly located in Auckland's premium retail suburb on a large 754sq m freehold site with huge corner profile to Morrow St, which connects with Broadway, and to Gillies Ave. Both roads carry large volumes of traffic.
"The property is also adjacent to the 277 shopping mall, with owner Scentre Group announcing just prior to the auction that they are looking to spend in the range of $150 million to $200 million on an upgrade and expansion of the high performing centre."
Kirby says the 640m2 building had also been meticulously refurbished over recent years and offered superbly presented retail and showroom retail spaces. The ground floor is occupied by national manchester retailer Bed Bath & Beyond with Kitchen Studio on the upper level.
41 Trugood Drive, East Tamaki.
Kirby says the property has future development potential as well, and its favourable Mixed Use zoning will be further enhanced by the Proposed Auckland Unitary Plan (PAUP), with the height limit for development increasing from 15 metres to 16.5 metres. Floor area to land ratio restrictions would also be removed under the new plan's proposed provisions.
"In recent years there has been increasing development activity in Newmarket with the addition of major new commercial buildings, refurbishment and expansion of existing buildings and a substantial increase in the number of residential apartments and this trend is expected to continue," Kirby says.
Valintine says the property was one of the most heavily bid auction offerings that Bayleys has put up for sale in recent years. "It once again reinforces that higher value properties can attract strong completion at auction and generate a substantial premium for their vendors."
Also purchased under the hammer in Newmarket was an 186sq m shop at 153 Broadway, Newmarket, part of Rialto Centre, which was sold for $3,050,000 at a 5.2 per cent yield by James Chan and Matt Lee of Bayleys' International Division
The property is leased to Cotton On which commenced an eight-year lease in September 2014 after a substantial new fitout of the premises. The Australian based multinational fashion retailer is paying an initial rent of $158,780 a year plus GST, with fixed annual rental increases to the Consumer Price Index plus one per cent.
Also selling at a low yield for an industrial property of 6.1 per cent was an 867sq m industrial unit completed in 2007 at 41 Trugood Drive, East Tamaki with 576sq m of high stud warehousing and 256sq m of air conditioned offices and showrooms. It was sold for $2,320,000 by Matt Mimmack, Bayleys North Shore Commercial in conjunction with Dave Stanley and Jamsheed Sidhwa of , Bayleys South Auckland with a 12-year lease to steel products supplier Anzor Fasteners Ltd until March 2020 with two four-year rights of renewal.
153 Broadway, Newmarket.
A variety of mostly vacant buildings also sold at or prior to the auction: A modern 1110sq m industrial building at 7 Portage Rd, New Lynn with 446m2 of 7m stud warehousing and 664sq m of office and amenities over two levels sold for $2,400,000 through James Appleby, Mike Adams and Grant Miller, of Bayleys West Auckland division.
Located on a narrow 2404sq m site, it was purchased with vacant possession by an owner-occupier. Bidding commenced at $1,350,000 and it was declared on the market at $1,925,000.
• Three buildings at 561-563 Manukau Rd, Epsom, in the Greenwoods Corner commercial strip on a 410m2 site in two titles sold for $2,175,000 through Damien Bullick and Alan Haydock, Bayleys Auckland. Situated on the corner with Empire Rd, in the double Grammar school zone, the buildings provide 376sq m of retail, office and residential accommodation with holding income from one small lease of $16,900 a year gross. • A 672sq m industrial building on a 1066sq m site at 157 Neilson St, Onehunga sold with vacant possession prior to auction for $1,175,000 through James Valintine and Sunil Bhana, Bayleys Auckland in conjunction with CBRE. • A 360sq m ground floor retail unit with eight dedicated carparks in a two-level commercial complex at 39 East Tamaki Rd, Papatoetoe sold with vacant possession for $871,000 through Tony Chaudhary and Janak Darji, Bayleys South Auckland. It generated fierce bidding competition from multiple bidders, including members of the local Indian community. Bidding started at $650,000 and it was declared on the market at $710,000 before eventually selling after close to 60 bids. • A 420sq m modern industrial unit at 333 East Tamaki Rd, East Tamaki with seven car parks sold with vacant possession for $780,000 through Katie Wu and John Bolton, Bayleys South Auckland. It has 245sq m of warehousing, 90sq m of first floor offices and 85sq m ground floor showroom. • A 334sq m warehouse at 32 Forge Rd, Silverdale with a 7m stud and small amount of office, built in 2008, sold with vacant possession for $650,000 through Rosemary Wakeman and Ashton Geissler, Bayleys North Shore Commercial
