Portfolio’s variety mirrors buoyant market

5:01 PM Friday May 11, 2018 Colin Taylor

Artist’s impression of consented commercial and residential development at 4 Ireland Rd and 7-9 Lagoon Drive. Photo / Supplied

Concerns about the sustainability of the commercial property market are overstated, says John Urlich, commercial manager for Barfoot & Thompson commenting on the launch of the agency’s first Insite commercial property portfolio for 2018.

Urlich says the commercial property market remains buoyant and for good reasons.

“Supply-side constraints continue to impact on the commercial property market as do other aspects of the economy; and vacancy rates remain at historic lows.

“The lesser availability of trade bank finance continues to challenge many seeking to increase their property positions, while owner-occupiers especially, are struggling to find productive property in the low vacancy environment.

“When these supply-side constraints are coupled with the population projections for Auckland in particular, it is unlikely demand for quality land and buildings will decrease in the medium term,” Urlich says.

He says it is still possible to achieve a solid gap between bank saving rates and the net yield for most quality commercial properties.

“Accordingly, investor demand is similarly strong which is partly due to the fact that we are starting to see signs of increasing pressure on rentals. The leasing front is still characterised with a shortage of accommodation options being available for prospective tenants.”

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The 12,932sq m site leased to Z Energy at 847-849 East Coast Rd, Northcross. Photo / Supplied

Urlich says no type of property is immune to some level of rental growth, whether offices, inner city high rise, suburban retail or industrial buildings.

“However, it is, as ever, a good time to buy,” he says.

One of the feature Auckland properties for sale in the new Insite portfolio publication is a freehold 4790sq m parcel of land held in four titles with over 100m of frontage to the busy southern side of the Panmure roundabout.

The development site, at 4 Ireland Rd and 7-9 Lagoon Drive, is being marketed by commercial brokers Reese Barragar and Cam Paterson who are selling it by tender closing at 2pm on Friday, May 25 – unless sold prior.

“There are four low-level buildings with an estimated building area of 2000sq m on the site along with around 50 carparks,” Barragar says. “However, the site is consented for the construction of six commercial units with 91 apartments. Currently, it is leased to three tenants who are paying total holding income of about $174,000 plus GST per annum with all the leases having demolition clauses.”

Paterson says the property is zoned Business Town Centre with a potential height restriction of up to 18m and allowing for both commercial and residential uses.

“This is a strategically located site on a five-pronged intersection serving key arterial routes including Jellicoe Rd, Lagoon Drive and the Ellerslie-Panmure motorway - which is a major link from the eastern suburbs of Panmure, Mt Wellington, Glen Innes, Pakuranga, Howick and East Tamaki to the southern State Highway 1 motorway.”

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A Bottle-0 outlet and Gasket Cafe lease the standalone property at 23 Kalmia St, Ellerslie. Photo / Supplied

Paterson says Panmure real estate values are likely to benefit from the continued development of the Auckland Manukau Eastern Transport Initiative (AMETI) which has already greatly improved road, bus and train transportation in the area including the opening of the Panmure rail station just 400m from the property.

Not far away in Ellerslie is another Insite portfolio listing comprising a comprehensively modernised 1950s’ standalone building of 452sqm on an 805sq m site, which is fully leased to the ‘funky’ Gasket Cafe and a Bottle-O liquor store.

“Zoned Business Mixed Use, this high-profile, low maintenance and passive income-generating property offers a secure annual cash flow of $93,235 plus GST from established occupants,” says Andrew Clark who, with colleague Nick Wilson, is marketing 23 Kalmia St for sale by tender closing at 4pm on Wednesday, June 6.

“It has built-in rental growth, strong tenant covenants and is located on the Ellerslie town centre retail fringe a short distance from the train station,” Clark says. “Situated on the eastern side of Kalmia St the tenants benefit from the building being exposed to 160,000 vehicles a day on the Southern Motorway and 8000 a day passing between Main Highway, Kalmia St and Great South Rd.”

Across the harbour bridge at Northcross on the North Shore, is another steady passive income earner in the form of a property earning $364,894 per annum plus GST plus operating expenses from a 12-year lease to Z Energy Ltd plus one 12-year right-of-renewal.

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The property at 190-196 Main Rd, Kumeu comprises two buildings and a working yard. Photo / Supplied

“It’s on the market for the first time in 35 years,” says broker Nick Brown who, with colleague Max Andrews, is marketing the elevated freehold site in two titles of about 2932sq m at 847-849 East Coast Rd for sale by tender closing at 4pm on Wednesday June 27 – unless sold prior.

“A favourable lease providing for frequent rent reviews and other investment attributes, will add-value to the property’s long-term development potential,” Brown says.

Andrews says the Z-service station has a low site coverage and shares a prime corner position with 12 other retail outlets. Its Business – Local Centre zoned site has a wide street frontage of the busy intersection of Carlisle, East Coast and Oteha Valley Rds.

To the west, on Kumeu’s main road, is another fully-leased portfolio offering, encompassing three freehold properties being disposed of by a family trust.

“Prospective purchasers can make offers on one property or all three,” says agent Peter Jeromson who is marketing 190-196 Main Rd for sale by deadline private treaty closing at 4pm on Wednesday June 7 – unless sold prior.

“This split-risk property has a variety of office, retail, industrial and yard uses,” Jeromson says.

“At 190 and 192 Main Rd, established tenants include Labtests, VTNZ, Subway and Bay Audiology; while at 196 Main Rd, the tenant has leased the 3420sq m yard on a month-to-month basis.”

Jeromson says the triple-dip property is located in a high growth area central to Kumeu’s commercial hub with frontage exposure to Main Rd doubling as State Highway 16.

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John Urlich, Barfoot & Thompson