As we head into October it’s looking like another record year. There has been a great deal of activity at the Colliers International North Shore office with sales still resulting in sharp yields and rental rates continuing to increase. Properties which have been available for a long period of time are now being leased as a result of high demand in a market with low vacancy levels.
We are seeing strong demand across all sectors (Retail, Commercial and Industrial) from investors, tenants and owner occupiers alike. We are advising tenants to plan ahead if thinking of relocating, as demand has outstripped supply in a lot of sectors. As supply decreases traditional North Shore tenants are looking further afield and we are noticing more activity in the Silverdale and Hobsonville areas due to the supply of commercial land and development activity in these areas.
In the commercial office sector, we were pleased to be involved with recently leasing of over 3,000 sqm at 61 Constellation Drive known as the Candida Office Park. Incidentally this development is now 100% fully occupied. There is circa 17,400 sqm of office development under construction at present mainly in the Albany/Takapuna area. 11000sqm of this is contributed to the 5 level Smales Farm B: Hive development, a flexible working space that is nearing completion later this year..
Yields for recent tenanted office investments around the North Shore have been between 7.25-6.5% however there has been a larger percentage of sales of vacant offices to owner occupiers as low interest rates continue.
The popular retail sector has seen a good churn of activity in the last quarter also. As an aside it’s great to see the quality of tenants improving in Takapuna’s main streets. Being Takapuna based we now are spoilt for choice for great eateries and overall a better shopping experience from when I started at Colliers back in 2006. Myself and Euan Stratton recently transacted the sale of 134 Hurstmere Rd with the popular drinking establishments Master And Apprentice, Elephant Wrestler and Hurstmere Road Brew Bar to name a few for $25,000,000. We have seen some very competitive sales with retail yields falling between 3.12- 6.1%. The majority of Colliers sales in this sector have been sub 5% in the last 12 months with no sign of things changing at present.
The industrial market remains the most active sector with some industrial buildings leasing only days after being listed. Landlords of industrial buildings have enjoyed steady rental growth over the last couple of years and tenant incentives almost seem to be a thing of the past.
Industrial yard based tenants are struggling to find space. As industrial land prices rise, we are finding yard users are not the highest best use for an industrial site and they are getting forced out to the outskirts of the city. New industrial land has opened up in the Silverdale area with the Reid family's Highgate Business Park attracting developers, tenants and owner occupiers. There are some great opportunities for industrial users in this staged development. Hobsonville and Westgate seem to be a popular overflow for North Shore companies also. Yields over the last 6 months for industrial investments have had a wide spread and we have seen these sit between 4.6-6.6%. It is very usual for well positioned standalone industrial properties to sit around the 5.5% yield. We have seen some brand new industrial units come to market recently in Albany, Silverdale and Hobsonville with all developments being sold off the plans to a mixture of owner occupiers and investors in a matter of weeks from hitting the market. This is proving to be a very hot market however as construction cost and land values continue to rise we wonder how long this can continue until something gives. The Wairau Valley is experiencing record low vacancies and some good rental growth, demand remains strong in this area due to its proximity to the city and main arterial roads.
As we head towards the last quarter of 2017, we expect activity to increase further. If you are looking to relocate, buy an investment, require a market appraisal or just want a general chat about the commercial property market, please feel free to call or drop by for a coffee to our newly refurbished North Shore office in Takapuna.