Falling interest rates, softer prices and volatility on the share market are making the commercial property market attractive for well-placed investors.
Merv Davies, general manager of Colliers International in Christchurch, said that while many institutions are not buying property at the moment, private investors are steadily emerging.
“As bank deposit rates fall, local investors, particularly private investors, property companies and syndicators are returning to the property market.
“Fundamentally, property ownership in New Zealand is no more risky than it was, in say 2006, but since then prices have fallen substantially across many sub-markets. The principal reason for this is reduced demand, especially in the higher price brackets,” he said.
Davies cites a 8094m2 property (4000m2 building) at Cranford St in Christchurch, which is currently the subject of a mortgagee sale or lease.
Leasing specialist Nick Doig describes the property as ideally suited for bulk retail, given its proximity to the busy Main North Rd and Cranford St intersection and the shortage of quality retail opportunities for tenants in Papanui - outside of Northlands Mall.
“All the work’s been done with a resource consent in place. The building is only a year or so old and is totally open plan so lends itself to being converted to retail for one large format tenant or split to suit several.”
Increasing the site’s further development potential is the neighbouring property at 478 Cranford St, which is also on offer. Super Cheap Auto is the anchor tenant but there is the ability to add a further 3300m2 to the development, which already has a resource consent.
Commercial sales broker Graeme Harris said the adjoining properties would be attractive individually or as one package as the two properties were originally planned as a single development.
“The key thing about 484 Cranford St is that a buyer would be getting this at well below replacement cost with vacant possession. They don’t have to go through the whole development procedure as it’s already been done and starting from scratch would take at least two years – with holding costs.
“The ability to acquire the adjacent property with its development potential allows someone to own both properties and control the tenancy mix of a substantial destination retail complex.”
The high profile Cranford St properties are among 14 South Island properties included in the latest National Portfolio by Colliers International. Others include:
- 15 Sheffield Crescent, Russley. The building is occupied on a 12 year lease by Christchurch Yarns NZ Ltd. Net income $930,000 p.a.
- Two units in Mandeville St, suitable for investors and owner occupiers.
- Industrial property at Parkhouse Rd and Tenahaun Pl, Middleton. Three titles with a total area of 5469m2.
- Parklands Tavern, corner Inwoods and Mairehau Rds. Freehold and business.
- 214-218 Main South Rd. Occupied by furniture manufacturer DA Lewis who will lease all the site for 12 months from settlement followed by an eight year lease over about 4000m2 of the warehouse.
- Bamford St, Woolston. 3945m2 in three titles. Currently leased by the O’Brien Group, fully owned by Fletcher Buildings Products.
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