Bayleys reports North Shore booming
This warehouse property at 15 Orbit Drive in Albany has already been re-tenanted for five years.
Bayleys North Shore Commercial has reported property sales and leasing transactions up 55 per cent in October from the same month in 2015 following on from a 52 per cent increase in September.
“This year is shaping up to be the busiest ever for the North Shore’s commercial and industrial property, says director Daryl Devereux. “The 190 transactions completed in the first half of its current financial year are the highest number recorded since the agency opened an office on the Shore 18 years ago, and are well up on the 170 undertaken in the same April-September period in 2015.”
Over 100 leases were concluded by Bayleys North Shore Commercial’s industrial, office and retail teams between April and September.
Nick Howe-Smith, also a director, says the industrial leasing market remains very tight as a result of negligible new development, low tenant turnover and owner occupiers competing strongly with tenants for the limited supply of vacant premises that do become available.
“Just how competitive the industrial market has become is reflected in the fact that the median number of days it is taking us to lease an industrial listing has almost halved from 70 to 37 over the past year. This compares with 62 days for an office listing and 110 for a retail listing where supply is more plentiful.”
Howe-Smith says the average percentage difference in the listing asking rental and the actual leasing rental for industrial premises has also dropped from a discount of 2.61 per cent last year to a minuscule 0.73 per cent.
“It’s a market that’s definitely weighted in favour of landlords. Rather than miss out, some tenants have been offering more than the asking rental in order to secure a property and this is becoming increasingly prevalent for smaller industrial units with rentals below $100,000 per annum.”
In other situations, landlords are signing up replacement tenants well ahead of incumbent tenants’ departure. A case in point has been the substantial recent lease of a 2566sq m industrial building at 15 Orbit Drive in the Interplex Business Park in Albany. The premises, comprising 75 per cent 12-metre high, clear span warehousing, is currently occupied by Makita NZ which has a lease expiring at the beginning of 2017. The property has already been re-tenanted for five years, with rights of renewal, at an initial annual rental of $422,000 through Matt Mimmack of Bayleys North Shore’s industrial team. It has been leased to an expanding importing and distribution business looking for more space which will move in as soon as Makita vacates.
“We were also able to achieve a very good yield on the sale of this property earlier this year despite the fact that the existing lease had less than a year to run,” says Mimmack. “The strength of demand for a very limited supply of quality premises like this, with such a favourable warehouse to office ratio, meant there was a low vacancy risk for the new owner and this has proved to be the case.”
In another significant recent Albany lease, the three office floors totalling over 1000sq m in a new four-level building at 28 Corinthian Drive in Albany’s Orchard Business Park have been leased to a large global corporate for its New Zealand head office through Dean Gilbert-Smith and Eddie Zhong in conjunction with Bayleys Auckland colleague Andre Siegert.
The company is expanding from smaller premises in Albany and has leased two 466sq m floors plus a penthouse floor on the top level for eight years at $300 per sq m plus 26 basement carparks at $35 per week.
The building has been developed by a Christchurch property investor using the proceeds of a Christchurch earthquake insurance claim to construct a replica four-level building. Bayleys North Shore Commercial has the master agency for the building and still has approximately 380 sq m available for lease on the ground floor where a restaurant and café are planned.
Agent Dean Gilbert-Smith has also recently leased 400sq m of ground floor space in Mitre 10’s new national headquarters building that is nearing completion at 67 Corinthian Drive to a national gymnasium chain for eight years.
Gilbert-Smith says fitness centre will be relocating from existing premises in Albany because of the development that is occurring at Orchard Park and in the surrounding area. Approximately 812sq m of the ground floor of the 7000sq m Mitre 10 building scheduled for completion in January next year is still available for lease as office space.
On the sales side of Bayleys North Shore Commercial’s business, transaction volumes concluded form April to September were up 20 per cent from 74 in 2015 to 89 while the value of those sales increased by 25 per cent from $160 million to $200 million.
Devereux says auctions have worked particularly well for vendors this year with plenty of competition among bidders resulting in Bayleys North Shore Commercial achieving a clearance rate of 75 per cent at new benchmark yields in many instances.
In the 10 months to the end of November, 27 auction sales were concluded by Bayleys North Shore Commercial at a total value of $41,122,000.