The North Shore commercial and industrial property market looks set for another good year with Bayleys North Shore Commercial already notching up a number of substantial sales.
The commercial property market has bounced back to life again after the slowdown that occurred late last year prior to the formation of the new coalition government.
“There was a decline in sales activity in the lead up to the September election and in the month-long period of uncertainty that followed while coalition negotiations were undertaken,” says Bayleys North Shore Commercial director Nick Howe-Smith. “However, once the government was finalised, and investors realised that its impact on the commercial and industrial property market was likely to be relatively neutral, activity got moving again. It’s now pretty much back to business as usual.”
Bayleys North Shore Commercial had a significant presence in Bayleys’ first national Total Property portfolio for 2018 – released early February and featuring over 70 commercial and industrial properties for sale from around the country – and has achieved some excellent results from it.
Four North Shore properties sold under the hammer at auction and three others that were passed in have conditional contracts on them, including a large site and commercial building with development potential at 8-12 The Promenade in central Takapuna, which was set aside at $6,500,000.
The largest unconditional sale to date from the first Total Property portfolio is a fully leased commercial building with seven tenants at 55 Barrys Point Road in Takapuna, which sold by tender for $5,775,000 at a 4.95% yield through James Kidd and Matt Mimmack.
The 1,549m² building is located halfway along the busy arterial road on a high profile 1,575m² corner site. Developed in the 1970s at a time when Barrys Point Road was predominantly an industrial area, it was originally divided into three self-contained warehouse/workshop tenancies. With Barrys Point Road’s shift to more of a retail and commercial precinct, the premises have been refurbished to allow for a mix of showroom and offices with small storage and car parking areas.
Matt Mimmack says the property attracted considerable interest from neighbours, investors and owner occupiers, with multiple tenders received because of the opportunity to add value under its new Auckland Unitary Plan Mixed Use zoning. This allows for the continued transformation of Barrys Point Road to a retail/commercial area with the added inclusion of residential. Intensive commercial and/or residential development is permitted up to 18 metres (four storeys) high.
Orchard Park success
Three properties in the recently completed Orchard Park Retail Hub at 21 Corinthian Drive, Albany which also featured in the Total Property portfolio attracted strong enquiry and sold at a total value of $6,410,000.
The largest offering encompassing the hub’s anchor tenancy, a 450m² Chinese supermarket, was sold by Deadline Private Treaty for $4,300,000 at a 6.04% yield by Eddie Zhong, Ranjan Unka and Terry Kim. The unit, located at the main entrance, is leased to the Yummy Mart supermarket for eight years from August 2017 with three eight-year rights of renewal.
Two other units in a corner position in the Orchard Park Retail Hub occupied by takeaway restaurants sold at auction through Eddie Zhong and Steven Liu.
An 87m² unit sold for $1,200,000 at a 4.47% yield with a 10-year lease from September 2017 to Double Happy Chinese restaurant. The auctioning of this property was brought forward after the vendor received an offer of $1,073,440 that they were prepared to accept.
“Bidding commenced at this price, which became the declared reserve, and additional competition from other parties – we had close to 20 people attending the auction – pushed the final sale price up a further $126,560,” says Eddie Zhong.
An adjoining 76m² unit with a five-year lease from August 2017 to Smile Dessert also attracted multiple bidders at auction before selling for $910,000 at a 4.94% yield. Bidding started at $400,000 and the property was declared to be “on the market” (meaning it had passed its reserve price) by auctioneer Richard Valintine at $850,000. Bidding quickly advanced to $900,000 and then a sequence of $1000 increases followed before the hammer finally came down.
Eddie Zhong says the units are part of one of the biggest convenience retail centres to be developed on the North Shore in recent years. Orchard Park Retail Hub has 16 units totalling 2,026m² with 94 common car parks and is the final stage of a two-part development undertaken by Northbridge Properties. The neighbouring first stage of the project, the Corinthian Retail Centre at 14 Corinthian Drive, has 14 units and 54 shared parks.
Eddie Zhong says nearly all of the units were sold off the plans or during construction by Bayleys North Shore Commercial to a mix of owner occupiers or investors who have subsequently leased the premises. The units are occupied by a variety of predominantly food and beverage outlets with some other essential service retail providers.
“This has been a very successful project which has met with strong uptake from the market because of its high exposure positioning, with triple frontage to Albany Highway, Corinthian Drive and Data Way, an abundance of common car parking as well as a wide commercial catchment and a significant population base from which to draw customers.”
The Orchard Park retail complex is the latest in a variety of major retail and mix used developments that Bayleys North Shore Commercial’s retail team has been involved with in recent years. Eddie Zhong says an important factor in the success of these projects has been the retail team’s involvement “from scratch” including in the concept design, planning and finally marketing and sales and leasing.
Industrial property sought after
Another substantial property featured in an earlier Bayleys’ Total Property portfolio, an 8,524m² industrial site at 201 Archers Road, Wairau Valley has sold for $7,040,000 through Ranjan Unka, Trevor Duffin and Matt Mimmack. Buildings on the underutilised site comprise a 1,700m² warehouse constructed in the early 1980s, plus a variety of small structures and lean-tos, generating net holding income of $181,333pa from two tenants.
On the market for the first time in more than 30 years, the property received nine tenders and sold to a local owner-occupier at a land value of $825/m².
“We fielded high volumes of enquiry with a lot of interest from local parties who recognise the inherent value of the Wairau Valley precinct,” says Ranjan Unka. “The offering was keenly contested by both owner-occupiers and investors looking to secure a large site in a sought-after area close to main arterials.”
“The lack of available industrial land and increases in land values are particularly acute in Wairau Valley,” says Trevor Duffin. “As a result, there’s been hardly any new industrial development in recent times so that pushes demand up.”
With the property’s existing tenants on month-to-month tenancies, the offering had particular appeal to owner-occupiers who have been struggling to find large properties in this popular area, says Ranjan Unka. “While in reasonable condition, the property has scope for improvement and the large yard area could lend itself to future redevelopment.”
Other recent notable industrial sales by Bayleys North Shore Commercial include:
A recently refurbished 2,424m² industrial building on a 4,532m² road-front site at 1-3 Parkhead Place, Albany sold for $5,100,000 at a 7.7% yield through Alex Strever, Laurie Burt and Matt Mimmack. It is fully leased to five tenants.
Two industrial buildings totalling 1,032m² on a 2,002m² site at 162 Foundry Road, Silverdale sold for $3,050,000 at a 4.92% yield through Rosemary Wakeman and Matt Mimmack. Two tenants are on four and five year leases.
Bayleys’ Total Property portfolio was established nearly 20 years ago to pool together commercial and industrial properties for sale from around the country and provide potential buyers with an easy way of accessing what is available in the market.
Now produced eight times a year, it offers vendors a very effective means of targeting national and international investors, says Nick Howe-Smith, director of Bayleys North Shore Commercial.
“It offers sellers a more cost-effective and targeted way of accessing buyers than through a traditional standalone marketing campaign and also enables a much bigger pool of potential purchasers to be reached, with Total Property’s substantial distribution database having being built up over many years. It is constantly qualified and updated and provides vendors with access to the most powerful buyer database in the country,” says Nick Howe-Smith.
“Total Property also offers investors, owner-occupiers and developers the most comprehensive range of opportunities available in the market to consider and choose from.”
Total Property listings are promoted in a magazine that also has informative editorial on the commercial property market and are also heavily marketed online (www.bayleys.co.nz/totalproperty).
Bayleys North Shore Commercial is currently sourcing properties for Bayleys’ next Total Property which closes on
May 11 and is released to the market on May 25.