Strong bidding, low yields mark latest auction

5:00 AM Saturday November 7, 2015 Colin Taylor

The highest price property to sell for $4,210,000, was this large commercial building at 113 Bank St in Whangarei

Strong bidding across a range of properties and low yields were a feature of Bayleys’ latest Total Property auction in Auckland with 16 properties selling for close to $24 million.

John Church, Bayleys' national director commercial, says investor demand for commercial property shows no signs of abating and is continuing to push prices up and yields down, with some offerings selling for several hundred thousand dollars over reserve at recent auctions.

“Yields that we thought couldn’t go any lower are being squeezed even tighter and there was further evidence of this at our latest auction, with a number of offerings selling at below or close to five per cent.” Church says.  

Two of the properties at the auction generated over sixty bids. One was a 280 sq m warehouse and showroom on a 563 sq m Mixed Use zoned site at 36 Burleigh St, Grafton, with exposure also to Mt Eden Rd, which sold for $1,795,000 at a 3.9 per cent yield through James Hill and Sunil Bhana of Bayleys Auckland. National tenant Brake & Transmission NZ has exercised the first of two three-year rights of renewal.

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This 150-year-old Edinburgh Castle Hotel at 215 Symonds St, Eden Terrace, sold for $2,490,000

Bidding started at $900,000 with a long sequence of mostly $5000 increases, after it was declared on the market at $1.6 million, adding nearly another $200,000 to the eventual sale price. Church says there has been a noticeable pick up in the latter part of this year in the sale of Mixed Use zoned properties which will have enhanced development potential under the Proposed Auckland Unitary Plan (PAUP).

Attracting close to 70 bids was a 320 sq m Wendy’s restaurant on a large, high profile site in two titles of 1037 sq m and 1080 sq m at 80-82 Great South Rd, Papakura.Marketed byEddie Zhong and Damian Stephen of Bayleys North Shore Commercial, along with Peter Migounoff of Bayleys South Auckland, it has a 20-year lease to Wendco (NZ) from 2000 with no rights of renewal. The property also has longer term development potential being zoned Metropolitan Centre under the PAUP. It was declared on the market at $2.5 million and attracted over 50 further bids, including $1000 increases at the end, before finally selling for $2,803,000 at a 5.7 per cent yield. 

One of the smaller offerings of the day, a retail outlet with a cafe tenant at 18 Clark St, New Lynn,also attracted some of the strongest bidding before selling through Grant Miller and Laurie Bell of Bayleys Auckland for $605,000 at a 4.6 per cent yield. It was declared on the market at $435,000 and close to 30 more bids followed before the hammer finally came down.

Astandalone 750 sq m warehouse plus 160 sq m first floor offices on a 1500 sq m site at 24 Rennie Drive, Airport Oaks, was declared to be on the market at $1,730,000 and sold for $1.9 million through Marty Roestenburg of Bayleys South Auckland at a 5.3 per cent yield following over 50 bids. It has a six year lease to a government tenant from 2014 with two three-year rights of renewal.

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This building housing a Wendy’s restaurant at 80-82 Great South Rd, Papakura, sold for $2,803,000.    

The highest price property to sell, at $4,210,000, was one of central Whangarei’s larger commercial buildings at 113 Bank St which is fully leased to five tenants. Located on a prominent 2072 sq m site on the corner of Bank St, Hunt St, and Vinery Lane; the 1781 sq m two storey building sold post auction at a 7.7 per cent yield through Ross Blomfield of Bayleys Whangarei and Mike Adams of Bayleys Auckland.

Spark Digital is the property’s anchor occupant with other tenants including two chartered accountancy practices and electricity lines maintenance company Northpower Fibre. Blomfield says the premises have one of the strongest tenancy profiles of any commercial property in Whangarei both in terms of quality of tenants and the length of the leases.

Originally constructed in the 1990s as offices for a legal firm, the building has a seismic rating of 80 per cent rating of New Building Standard (NBS) plus 34 on-site car parks and back up generators. It was purchased by a Coromandel based investor who owns a number of Auckland commercial properties but who was making his first acquisition in Whangarei.  

As has been the case in the residential market, investors are looking for opportunities in markets where the competition is not as fierce as in Auckland and where income yields are higher,” says Church.  “Our agents in Whangarei, Hamilton, Tauranga and Rotorua are all noting increased interest in their markets from Auckland-based commercial property investors.”

Also selling post auction was the150-year-old Edinburgh Castle Hotel, one of Auckland’s few remaining 19th century hotels, on a 571 sq m Mixed Use zoned site at 215 Symonds St, Eden Terrace,on the corner with Newton Rd. It sold for $2,490,000 at a 5.8 per cent yield through Cameron Melhuish and Andrew Wallace of Bayleys Auckland. New Skyworld Bar and Hotel Ltd, which exercised the first of four three-year rights of renewal in July, operates a sports bar on the ground floor with residential accommodation above.

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Two units in the Harbourside Business Park at 483 Rosebank Rd, Avondale, sold for $2.4 million

Out west, two unitsin the Harbourside Business Park at 483 Rosebank Rd, Avondale, sold with vacant possession for $2.4 million through James Appleby and Adams. A407 sq m two-level showroom and office building with 16 car parks sold for $1 million while an 800 sq m unit with 400 sq m of warehousing and 400 sq m of office space sold for $1,4 million.

Other properties to sell at the Total Property auction included:

  •          A507 sq m partially tenanted character building on a high profile 341 sq m corner site at 131 Mt Eden Rd, Mt Eden sold for $1,340,000 through Phil Haydock and Jean-Paul Smit, Bayleys Auckland.
  •          In Warkworth 320.1 ha of former forestry land and native bush on Moir Hill and  Matthew Rd, with sweeping coastal views and several kilometres of metal roads. sold for $811,000 through Duncan Napier and Dianna Coman of Bayleys Warkworth.
  •          A407 sq m  high stud warehouse, office and showroom with eight car parks at 7D Douglas Alexander Parade, Albany,sold vacant for $920,000 through Laurie Burt and Ashton Geissler of Bayleys North Shore Commercial
  •          A 150 sq m office unit at 331 Rosedale Rd, Albany sold for $635,000 at a 6.9 per cent yield on a two-year lease through Alex Strever and Dean Gilbert Smith of Bayleys North Shore Commercial.
  •          A597 sq m industrial building at 41-53 View Rd, Wairau Valley, with a mix of warehousing, office and showroom space, sold with vacant possession for $960,000 through Adams and Trevor Duffin of Bayleys North Shore Commercial
  •          A158 sq m two level new building on a 129 sq m site with two car parks at 135 Meadowbank Rd, Meadowbank, was sold by Ed Donald and Sarah Boles of Bayleys Auckland, for $750,000 to an owner occupier intending to move into the ground floor space. The building has serviced offices with four tenants on the upper level and a hair salon on a monthly tenancy in the ground floor retail area.
  •          A 715 sq m two level building on a 933 sq m site, at 164 Stoddard Rd, Mt Roskill, with multiple retail tenants generating gross annual rental income of $133,143, sold prior to auction for an undisclosed price through Tony Chaudhary and Janak Darji, Bayleys South Auckland.
  • A2094 sq m site with main road frontage and Light Industrial zoning at 143 Bollard Rd, Tuakau, sold for $517,500 including GST through Graeme Moore of Bayleys South Auckland.

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John Church, of Bayleys.