Retail properties continue to lead the charge

Media Release

22.09.2014

Retail properties continue to lead the charge at Bayleys’ Greater Auckland auctions

Stand-alone retail properties have again led the market in sales at Bayleys’ latest Greater Auckland auctions held in the city recently.

Within the retail sector, foodservice, convenience, and grocery outlets were in hottest demand – with multiple bids on a range of suburban locations within the Greater Auckland isthmus.

The auction programme started strongly – with 10 of the first 11 land and building properties on the run sheet all selling under the hammer. Headlining the day was a block of six retail tenancies on a high-profile corner location in Vincent Street, Howick. The 571 square metre building on 660 square metres of land returned a combined annual income of $121,749 plus GST and sold for $2.4 million at a yield of 5.06 percent.

The tenancy spread incorporates a dairy/Lotto shop, florist, café, butchery, pharmacy, hair salon and doctor’s studio. The listing was marketed by Shane Snijder and Tony Chaudhary of Bayleys Manukau.

The demand for retail premises in the auction room continued over to North Shore listings, where both units up for auction at the Wairau Junction retail hub sold under the hammer.

A 98 square metre unit with fast food outlets Nando’s and Pita Pit as tenants and returning an annual income of $73,000 sold for $1.05 million at a yield of 6.95 percent. Nearby in the same hub, the 330 square metre Produce Planet food and grocery mini-market building returning $85,000 in annual rental sold for $1.26 million at a yield of 6.74 percent.

The Wairau junction portfolio was jointly marketed by James Chan and Matt Lee of Bayleys Central Auckland, and Damian Stephen of Bayleys North Shore.

The trend continued gaining momentum through the sale of a Manukau Road retail unit in Epsom, where a high profile 228 square metre property with a Bottle O liquor store as the sole tenant returning annual income of $55,825 plus GST was sold for $768,000. The property was marketed by Mark Pittaway of Bayleys Central Auckland and delivered a yield of 7.26 percent.

A Mad Butcher outlet in Triangle Road, Massey, returning $96,080 per annum plus GST was passed in at a top bid of $1.050 million but sold hours later through post-auction negotiations. The 527 square metre building and four car parks is leased to the Mad Butcher chain until 2016 and was marketed by Damien Bullick of Bayleys Central Auckland.

Bayleys’ commercial and industrial director John Church said the day’s proceedings reflected the classic idiom of commercial property investment.

“Well built, modern, stock in good locations, with a strong or nationally-branded tenant in place on a solid lease all sold well. And retail is certainly flavor of the month among investors,” Mr Church said.

“Conversely, B and C-grade stock in less desirable locations with shorter lease terms received fewer, if any, bids, as did larger retail units.”

Bidders showed a clear demarcation in their appetite though between individual units or small dual tenanted retail property holdings, and mid-sized blocks with multiple tenancies – particularly where those tenants were commercially orientated.

While single and dual tenancy retail offerings in Wairau Road sold after strong bidding, a bigger retail block just a short distance away in Archers Road reflected the market’s appetite for stand-alone strata-title units.

The 774 square metre retail premises on 2030 square metres of land in Archers Road contains a Japanese food outlet, Jetts Fitness branded gymnasium, a bridal wear shop, and pet food retailer. The property was passed in after an opening vendor bid of $3million.

And just a few hundred metres away in the opposite direction, a substantial 1680 square metre building with a variety of independent tenants returning an annual income of $187,775 plus GST was passed in after an opening vendor bid of $2.250 million.

This front portion of the building is occupied by bedroom furnishing retailer Bedstop, with six smaller retail and office spaces of between 22 – 103 square metres tenanted by a range of service and consultancy businesses.

A similar property in the heart of the South Auckland rural township of Tuakau mirrored those urban results. The 1615 square metres of building structure housing six independent tenancies and generating a total of $89,980 plus GST of rental income per annum was passed in at $917,500.

Location and building age were sited as “bidder reluctance issues” when it came to a Mad Butcher retail outlet in Triangle Road, Massey, which was passed in at $1.050 million.

Elsewhere in the sectors covered in the Greater Auckland auction, the land and buildings housing an ANZ branch in Great South Road, Papatoetoe, and returning $140,483 plus GST per annum, sold for $2.255 million. The property was marketed by Nick Bayley and Ben Bayley of the Bayleys Manukau office for a yield of 6.22 percent

ANZ has just signed a new six year lease on the location, with two further three year rights-of-renewal. The building has a seismic assessment of 80 percent of New Building Standards.

Substantiating the demand for location-based properties, a 134 square metre home/work building with commercial use rights in Jervois Road, Ponsonby, sold for $830,000. The vacant rustic barn style property clad in corrugated iron has a half share of 511 square metres of land, and was sold by James Were and Scott Kirk of Bayleys Central Auckland.

Meanwhile, a vacant 645 square metre commercial premises with some high stud warehousing space in Archers Road, Glenfield, sold for $1.130million. The property – which requires modernising and refurbishing - was marketed by Trevor Duffin and Alex Strever of Bayleys North Shore.

Two industrial-class properties sold under the hammer. A 1913 square metre group of buildings on1606 square metres of land in Dominion Road, Mount Roskill, sold for $2.47 million at a yield of 4.53 percent. One of the tenants is a sheet metal firm with a light industry manufacturing operation. The property was marketed by Mike Adams and William Coates of Bayleys Central Auckland.

And in South Auckland, land and buildings housing two automotive panel beating and paint businesses in Great South Road, Manurewa, sold for $871,000 for a yield of 6.93 percent. The two tenancies within the 490 square metre building on 1467 square metres of land – enabling some 30 cars to be parked – generate a net rental return of $60,375 per annum. The property was marketed by Peter Migounoff and Shane Snijder of Bayleys Manukau.

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