Development potential in demand

5:00 AM Saturday October 1, 2016 True Commercial

The highest price, $4,250,000, was paid for the site occupied by Onehunga law firm Daniel Overton & Goulding, 33-35 Selwyn St.

Properties with enhanced development potential under their new Auckland Unitary Plan zonings were in hot demand at Bayleys latest Auckland Total Property auctions with 18 sales of close to $35,000,000 concluded.

The highest price of $4,250,000 was paid for a 1272sq m under-utilised site at 33-35 Selwyn St, Onehunga with a single-level 562sq m office building. It was built for one of Auckland’s longest established suburban law firms, Daniel Overton & Goulding, in 1973 and has been occupied by them ever since.

Nigel McNeill, who sold the offering with Bayleys Auckland colleague Meredith Graham and Tony Chaudhary of Bayleys South Auckland office, says a significant attraction for bidders was the property’s Town Centre Onehunga zoning under the unitary plan — enabling development up to a height limit of 24.5 metres (six storeys).

The property was declared “on the market” at $3,600,000 and sold at a 4 per cent yield on a new six-year lease to the legal firm with one six-year right of renewal.

“The property would be well suited to a mixed use redevelopment in the longer term given its zoning, three street frontages and proximity to Onehunga Mall, the main bus terminal and the railway station,” says McNeill.

“But in the medium term it offers an attractive investment holding with a low maintenance, solidly constructed building with a Grade A seismic assessment and a long standing tenant that is committed to the area.

“The lease also has annual fixed rental increases of 2 per cent providing built in rental growth.”

A property in Papatoetoe with a Town Centre zoning, and a height allowance of 18m also attracted strong bidding. The 1459sq m site at 320 & 322 Great South Rd with a two-level 1040sq m fully leased commercial building, with four tenants, sold for $3,300,000 at a 3.6 per cent yield through Matt Lee and James Chan, of Bayleys International Division and Chaudhary, Bayleys South Auckland.

It was declared on the market at $2,500,000 and more than 80 further bids followed, including a number of $1000 increases, before it eventually sold to a neighbouring property owner.

Chan says an area of surplus land at the rear of the property, currently used for casual parking and on its own 595sq m title, added to development appeal.

Tenants include long-term occupants Li’lAbner Takeaways and the Village Foodmart on the ground floor, with a new five-year lease on the top floor to a night club.

The lowest yield of 2.37 per cent at the auctions was for a 517sq m industrial building on an under-developed 725sq m site at 6 Western Springs Rd, Kingsland, marketed by Scott Kirk and James Were of the Bayleys Auckland city & fringe team.

It has a Local Centre zoning with a 16m height limit. It is leased until the end of next year and sold for $2,925,000.

Another notable feature of the Auckland Total Property auction was the sale of all five offerings in The Grange, a new retail convenience centre located on State Highway 1 in Warkworth.

A childcare centre licensed for 80 children with 390sq m of indoor space and an outdoor play area of 442sq m, sold for $3,350,000 at a 5.2 per cent yield through Matt Lee and James Chan in conjunction with Jan Hutcheson, Bayleys Warkworth and Stephen Scott, Bayleys Auckland.

It has a new 20-year lease to Educare Group which has eight childcare facilities in Northland and is expanding into other parts of the North Island.

The lease has fixed annual 3 per cent rental increases, with a review to market after 10 years.

The other units to sell at The Grange were:

• A 62sq m unit, leased to Tank Juice for 10 years, with a five-year right of renewal, sold for $655,000 at a 5.5 per cent yield. The lease has fixed annual 3 per cent rental increases.

• A 48sq m unit leased to Noodle Noodle for 10 years, with a five-year right of renewal, sold for $475,000 at a 5.8 per cent yield. Its lease has fixed annual rental increases to the Consumer Price Index (CPI) plus 1 per cent

• A 59sq m unit leased to Kebabs on Queen for seven years, with a five-year right of renewal, sold for $580,000 at a 5.6 per cent yield. Its lease also has fixed annual rental increases to CPI plus 1 per cent

• A 389sq m unit leased to bulk retailer Floorwise for six years, with a six-year right of renewal, sold for $1,550,000 at 6.5 per cent yield. Its lease has fixed annual rental increases to CPI plus 1 per cent

Bayleys’ North Shore office also had a strong day at the auction selling five of its offerings. Its largest sale was a fully leased two-level 905sq m commercial building at 231 Dairy Flat Highway, Albany, with 16 retail and office tenancies, which sold for $3,500,000 at a 7.2 per cent yield through Dean Gilbert-Smith, Eddie Zhong and Alex Strever. The building is on an 809sq m freehold site with a Local Centre zoning in the centre of Albany Village.

Bayleys North Shore Commercial agents also sold three investment properties at yields of less than 5 per cent:

• A 664sq m industrial building on a 1,105sq m Light Industry zoned site, with a new four-year lease to panel beater, sold for $2,025,000 at a 4.4 per cent yield though Simon Aldridge and Chris White. Approximately 330 sq m of undeveloped land is currently used for car parking.

• A 197sq m single-level retail building on a 306sq m high profile corner site at 157-159 Lake Rd, Belmont with a Local Centre zoning on the main arterial to and from Devonport sold for $1,400,000 at a 4.1 per cent yield through Simon Aldridge and Michael Nees. The anchor tenant is Belmont Liquor Centre with income also from a Thai takeaway and a Spark telecommunications tower.

• A 162 sq m industrial unit at 59-61 View Rd, Wairau Valley sold for $483,000 at a 4.8 per cent yield through James Kidd and Ashton Geissler. The tenant Goodstore NZ occupies multiple units in the block and has recently signed a new four-year lease.

In the northwest, a vacant 1743sq m freehold industrial site in 14-lot subdivision opposite Westgate Town Centre at 8 Kawakawa Place, Whenuapai sold for $862,000 at $495 per sq m through Grant Miller, Laurie Bell of Bayleys West Auckland division. Resource consent has been granted for a four unit development on this site.

There were also two substantial industrial sales in South Auckland at the auction. A 1540 sq m industrial building on a 3087 sq m site 11 Bolderwood Place, Wiri sold vacant for $3,235,000 through Nick Bayley and Karl Price. It has a 1070sq m warehouse with three gantry cranes, 140sq m canopy, 320 sq m of office plus a 150sq m mezzanine floor and a yard of approximately 660 sq m.

In Papakura, a 1442 sq m industrial building on a 6334 sq m corner site at 1 Croskery Rd sold for $2,510,000 at a 6.0 per cent yield through Mike Adams and Peter Migounoff. It has a 10-year head lease from May 2011 to a construction company.