Low yields feature of Bayleys auction

5:00 AM Saturday June 11, 2016 Paul Charman

At $5.1m industrial building at 61-62 Allens Rd, East Tamaki, was the largest sale.

One of four Huapai retail outlets to sell was the Wine Circle liquor store. The corner site at 589-597 Mt Eden Road, sold for just over $3.6m. A panel beater, the anchor tenant at 394 New North Rd has been in occupation more than 20 years.

Continuing strong investor demand for a scarce supply of good quality commercial and industrial property offerings has resulted in 15 properties put up for auction in Bayleys’ second 2016 Total Property portfolio selling for close to $30 million.

Low yields on tenanted investment offerings were again a feature of the auctions with four properties selling at yields of under 5 per cent and a further eight selling at between 5 and 6 per cent.

The remaining three properties which sold were either vacant or semi-vacant.

Bayleys’ national commercial director John Church says a combination of a reduction in interest rates and investor demand has pushed commercial property yields to levels that are lower than anyone could have reasonably forecast.

“They are also a reflection of the relatively limited supply of commercial and industrial properties being presented for sale at present.

“This is because the alternatives offered in an investment market characterised by very low bank and bond rates and share market volatility aren’t that enticing.

“Therefore the supply and demand balance is seriously skewed to the demand side.”

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One of four Huapai retail outlets to sell was the Wine Circle liquor store.

The lowest yield of 3.8 per cent was for two adjoining shops on 351sq m of land 91 and 93 Ashby Avenue, St Heliers, with long-standing tenants which sold for $1,365,000 through Tony Chaudhary and Amy Weng, Bayleys South Auckland.

Part of a block of suburban retail and commercial premises, the property has two longstanding tenants compromising a 117sq m dairy and a 97sq m takeaway.

The auction date for this property was brought forward when the vendor, who had owned it for 27 years, received a pre-auction offer they were prepared to accept.

Bidding started with a declared reserve of $1,325,000.

The largest under-the-hammer sale was $5,100,000 for a 3260sq m industrial building on a 7500sq m Business 5 zoned site at 61-62 Allens Rd, East Tamaki which was sold to an investor at a 4.9 per cent yield by Dave Stanley and John Bolton, Bayleys South Auckland.

Bidding commenced at just over $4 million on the property which comprises 2980sq m of medium-stud warehouse with four-roller door access and 280sq m of office and amenities.

It has a four-year lease expiring in August 2018 with no right of renewal.

At the smaller end of the market, four unit-titled retail premises in a neighbourhood retail convenience centre at 329A Main Rd, Huapai marketed by Stuart Bode, Bayleys Auckland and Terry Jones, from Bayleys Westgate office, generated very strong bidding with two of them selling at yields of under 5 per cent.

A 200 sq m outlet occupied by Pizza and Pasta until November 2016, with four three-year rights of renewal, sold for $616,000 at a 4.2 per cent yield.

The current net annual rental of $26,000 will increase to $31,000 pa in November if the tenant renews.

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The corner site at 589-597 Mt Eden Road, sold for just over $3.6m.

A 95sq m unit, tenanted by Blue Chip takeaways until January 2021, with one six-year right of renewal, was sold for $616,000 at a 4.9 per cent yield in conjunction with Tony Chaudhary, Bayleys South Auckland.

Chaudhary was also involved in the sale of another of the units, a 91 sq m outlet occupied by The Gallery Cafe on a lease until February 2021, with one six-year right of remaining, which sold for $540,000 at a 5.5 per cent yield.

The final Huapai retail outlet to sell was a 112sq m liquor store, which is tenanted by the Wine Circle until July 2018, also with one six-year right of renewal.

It was sold by Bode and Jones in conjunction with Terry Kim, Bayleys North Shore Commercial for $513,000 at a 5.4 per cent yield.

Also attracting a large number of bidders was a 680sq m corner site at 589-597 Mt Eden Rd, Mt Eden with 497sq m of buildings, with an Initial Evaluation Procedure (IEP) seismic rating of 28 per cent of New Building Standard (NBS), which sold for $3,610,000 through Nigel McNeill and Colin McKenna, Bayleys Auckland and Tony Chaudhary.

The property was declared on the market by auctioneer Richard Valintine at $3,450,000 and a long sequence of mostly $10,000 and $5,000 bid increases pushed the price up a further $160,000 before the hammer finally came down.

McNeill says the site’s development potential will be enhanced by its Proposed Auckland Unitary Plan Neighbourhood Centre zoning.

He says the land sale price of $5308 per sq m and the land and buildings price of $7,235 per sq m would be among the highest achieved for a Mt Eden commercial property.

Comprising a single-level, 1920s retail building, containing a restaurant and a vacant former antique shop, and an adjoining two-level building on Kingsview Rd with a yoga studio on ground floor and flat above, the buildings are close to 50 per cent leased and are generating net annual rental income of $63,363 plus GST.

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A panel beater, the anchor tenant at 394 New North Rd has been in occupation more than 20 years.

Other properties to sell were:

Unit 4, 32 Constellation Drive, Albany: A 251sq m retail premises in a fully leased eight-unit complex on corner with Atlas Place sold for $2,540,000 at 5.1 per cent yield through Anna Radkevich and Ranjan Unka, Bayleys North Shore Commercial and Mustan Bagasra, Bayleys Orewa. The unit is occupied by three tenants, a bakery, nutritionist and Bruce Lee Sushi on six-to-10-year leases, from 2013.

Unit 14, 100 Don McKinnon Drive, Albany: A 267sq m unit in Northbridge Plaza, with two shops on short term leases, sold for $1,750,000 at a 5.6 per cent yield through Anna Radkevich and Ranjan Unka, Bayleys North Shore Commercial and Tony Chaudhary.

11F Paul Matthews Rd, Albany: A 524sq m high stud warehouse and two levels of air conditioned office and showroom space, plus 11 carparks, sold with vacant possession post auction for $1,270,000 through Matt Mimmack, James Kidd and Ashton Geissler, Bayleys North Shore Commercial. It is part of a five-unit development completed in 2003.

322 and 344 New North Rd, Kingsland: An underdeveloped 592sq m site in two titles with Mixed Use zoning and two adjoining warehouse and workshop buildings and first level apartment totalling 281 sq m sold for $2,575,000 at a 5 per cent yield through James Were, Phil Haydock and Scott Kirk, Bayleys Auckland. The buildings have short term leases, with six-month termination clauses.

394 New North Rd, Kingsland: A 673sq m Mixed Use zoned site whose anchor panel beater tenant has been in occupation for over 20 years, with additional income from a billboard and five bedroom house, sold for $2,400,000 at a 5.7 per cent yield through Tony Chaudhary and Janak Darji, Bayleys South Auckland.

22 Alderman Place, Mangere East: A 4160sq m industrial site with two main buildings — sold with vacant possession for $2,600,000 through Stuart Bode and James Chan, Bayleys Auckland and Dave Stanley Bayleys South Auckland. It has a 693sq m meat processing plant completed in 1995 and a 366sq m frozen storage building with a 9.5m stud, completed in 2000.

Unit I, 451 Ti Rakau Drive, East Tamaki: A 434sq m bulk retail unit in The Hub sold for $2,680,000 at a 5.5% yield through Rosemary Wakeman, Bayleys North Shore Commercial and Geoff Wyatt, Bayleys South Auckland. There is a six-year lease from March 2016 to The Bed People, one of six outlets in Auckland and Waikato, with fixed annual rental increases of CPI + 2 per cent.

26 Elliot St, Papakura: Two industrial units totalling 480sq m from which Hugh Munro Panelbeaters has been operating for over 30 years sold for $1,033,000 at a 5.35 per cent yield through Shane Snijder and Peter Migonouff, Bayleys South Auckland. The 808sq m site is located on a main arterial road that connects the Southern Motorway and the Papakura CBD.