Expo to examine the regions’ commercial property market

5:00 AM Wednesday May 25, 2016 Paul Charman

The Taupo building leased to Corys Electrical.

Bayleys Real Estate says Auckland commercial and industrial property investors are increasingly looking to regional New Zealand.

In response, the company plans to showcase properties from throughout the country at a Regional Commercial Property Expo, to be held in Auckland early next month.

The Expo, at Bayleys head office in Auckland’s Viaduct Harbour, is scheduled for the afternoon and evening of June 9.

Bayleys’ national commercial director, John Church, says regional property expos have promoted residential properties from other areas but one for the commercial and industrial sector is a first for the company.

“It’s part of our focus on strengthening our national offering to commercial property vendors, in response to high-level interest from Aucklanders in other centres.

“The situation is not a dissimilar to that occurring in the residential market, where very high prices in Auckland are forcing buyers to look elsewhere.”

Huge competition for a limited supply of well-located and tenanted commercial investment properties in Auckland is encouraging investors to seek out opportunities out of town, says Church.

Good quality commercial offerings in provincial cities, as well as in Wellington and Christchurch, in most instances can be secured at a more affordable price.

“And at a better initial income return than would be case for a comparable Auckland property.”

Despite the downturn in the dairy market, regional commercial and industrial property markets have been performing strongly and are expected to continue to do so, says Church

He points to the ANZ’s latest quarterly regional trends economic overview, for the December 2015 quarter, showing quarterly growth rates for some provinces hitting multi-year highs, led by Taranaki, 3.8 per cent; the Bay of Plenty, 3.2 per cent and Nelson-Marlborough, 3.1 per cent.

In the annual GDP figures for the 2015 calendar year, Gisborne took the top spot with 5.0 per cent annual average growth, a 13-year-high for the province.

Growth in four other North Island regions was above the national average: Bay of Plenty, 4.8 per cent; Northland, 4.3 per cent and Hawke’s Bay, 3.3 per cent; with Auckland showing 4.2 per cent growth.

TRUE COMM Kereiti Street.jpg

The building leased to Spark Digital subsidiary Gen-I, at Mount Maunganui 

“So without minimising hardships many dairy farmers are experiencing, we appear to have developed much more diverse regional economies,” says Church.

“Other agriculture sectors such as beef, horticulture — and in particular kiwifruit and apples — as well as viticulture are performing well, helped by a drop in the Kiwi versus the US Dollar over the past 12 months.

“Record tourism and net migration numbers are also benefiting regional New Zealand.

“All these are having a positive impact on most provincial commercial property markets, with some excellent outcomes for vendors”.

Recent sales of North Island properties to Auckland investors include:

• A 629sq m showroom and warehouse on a 1,171sq m CBD site at 32 Waikato Street, Taupo leased to Corys Electrical sold for $1,360,000 at a 6.2 per cent yield through Gary Harwood, Bayleys Taupo and Mike Houlker, Bayleys Auckland

• A modern two-level office building at 36 Kereiti Street, Mt Maunganui, leased to Spark Digital sold for $2,450,000 at a 6.4 per cent yield through Brendon and Lynn Bradley, and Matthew Gibbard, Bayleys Tauranga.

• An 883sq m multi-tenanted industrial building on a 1,702sq m site at 47 Chambers Road, Tokoroa sold for $500,000 at a 9 per cent yield through Brendon Bradley, Bayleys Tauranga.

Church says more regional vendors are taking advantage of increasing Auckland investor interest in provincial offerings, with 64 of the 98 properties featured in Bayleys’ latest national Total Property commercial and industrial portfolio being from outside of Auckland.

• Exhibition stands will be manned by Bayleys commercial representatives from around the country and there will also be presentations on regional economies and property markets by NZIER and Bayleys Research. Auckland investors interested in attending the expo can register at www.bayleys.co.nz/regionalexpo.