Over two thirds of the commercial and industrial properties offered for sale in Auckland last month in Bayleys’ first Total Property portfolio auction for the year found buyers despite the massive upheaval occurring in investment markets as a result of Covid-19.
A total of 17 out of 25 properties auctioned on March 11 sold at a total value of just over $27 million, with four out of five North Shore offerings selling under the hammer.
“We went into the auction with a certain amount of trepidation given the turmoil in equity and bond markets,” said Bayleys’ Auckland commercial director Lloyd Budd. “But we ended up with a great result for our vendors which once again reinforced the attraction for investors of bricks and mortar as a defensive asset class in turbulent times.
“We had one of our biggest crowds in recent years for the auction, with bidding on all but two of the offerings and a sizable number of observers who came along to check out what the market was doing.”
Budd said six of 13 fully leased tenanted properties sold at yields of less than five per cent. “This was a clear indication that the market had already factored in further interest rate drops which was confirmed by the Reserve Bank’s three quarters of a percentage point cut to the OCR (Official Cash Rate) the following week.”
The lowest yield at the auction was 3.93% for two adjoining industrial units at 36 Arrenway Drive in Albany. The units built in 2004 were sold by Laurie Burt and Matt Mimmack as one lot for $3.26 million at $4598 per sqm on their combined floor area of 709sqm.
Burt said the offering was in a sought-after location adjacent to Interplex business park and was a standalone two-unit development with its own underlying land holding which increased its attractiveness to investors. One of the units also has a rent increase in May which will increase the net income return to 3.99 per cent.
Other North Shore properties to sell at the auction were:
The only North Shore property to be passed in at the auction, a 771sqm office and warehouse building at 19F Orbit Drive, Albany in the Interplex business park, also attracted good bidding. With a new four-year lease to NZ Merchants Ltd, it was passed in at $3.05 million, at a yield of 4.85%, and negotiations are continuing with interested partie, says Matt Mimmack.
Bayleys undertakes eight national Total Property portfolio marketing initiatives a year, in which a large selection of good quality commercial and industrial properties are presented for sale. The first Total Property portfolio for 2020 featured 114 properties.
Bayleys’ Commercial North Shore general manager Daniel Henderson says Total Property magazine which showcases offerings from Bayleys’ offices around the country, and also has complementary editorial articles, is New Zealand’s most widely circulated commercial and industrial property publication. A total of 15,000 copies are mailed, personally addressed, to a database of active purchasers which is constantly qualified and updated.
The portfolios and their properties also receive extensive promotion through a range of digital electronic direct mail communications, print media and online display advertising, all commercial property websites, Google AdWords search engine marketing and targeted advertising on social media.
“Total Property’s database encompasses the Who’s Who of the New Zealand commercial property investment market as well as offshore investors who are interested in our market,” says Daniel Henderson. “It is the most cost effective and successful way of reaching a big pool of potential purchasers in the market.”
Bayleys Commercial North Shore is currently sourcing properties for the fourth Total Property portfolio for 2020 which closes on May 8.
Two substantial North Shore land holdings in Birkenhead and Barrys Point Rd are for sale in Bayleys’ latest Total Property portfolio offering future add value and development opportunities.
A 1,796sqm land area with only around 25 percent site coverage at 14-20 Mokoia Rd in the heart of Birkenhead’s town centre is available for the first time in nearly 40 years.
“Located atop the Highbury ridgeline, this is undoubtedly one of the best commercial and/or residential development opportunities to come to the market in Birkenhead,” says Adam Curtis who is marketing the property with Adam Watton and Ranjan Unka.
The site’s Town Centre zoning allows for mixed use buildings up to a height limit of 27m. An elevated, sizeable block of vacant land at the rear, currently used for casual carparking and overlooking a council carpark, is ripe for a multi-level development which would provide panoramic harbour and harbour bridge views from the upper levels, says Adam Curtis.
“Three longstanding tenants occupy a 450sqm character building located at the front of the site, including Yarntons
clothing store which is something of a Birkenhead institution and stocks the popular R.M. Williams clothing brand as well as local school uniforms.
“Flexibility is embedded in each of the leases to allow the purchaser to add value while benefiting from the $120,000 of net rental income the tenancies are currently generating.”
A 1,647sqm site encompassing three separate fee simple titles and currently occupied by associated auto servicing and panel beating businesses is also for sale at 41-45 Barrys Point Rd, Takapuna.
“This is a fantastic opportunity to secure a property with huge potential in a high-profile position on this busy arterial road,” says Matt Mimmack who is marketing the property with Daniel Henderson and Ranjan Unka. “Barrys Point Road’s Mixed Use zoning under the unitary plan allows for greater intensification of this site incorporating a variety of commercial and residential uses.”
The property is currently returning net annual rental income of $101,990pa plus GST from leases to two long-established tenants, Causeway Panelbeaters and Causeway Motors which have been in occupation since 1959 and 1966 respectively. Their current leases run until October 2021, with one further three-year right of renewal, but they have 12-month redevelopment clauses which could be exercised at the new owner’s discretion.
“The property’s future growth potential should appeal to developers, add value investors or land bankers,” says Ranjan Unka. “A good holding income offers time for the next owner to consider and plan their options for this valuable land holding which is strategically located near State Highway 1 motorway interchanges and is only a few minutes from Takapuna's CBD.”