A surge in buyers eyeing up ‘mixed-use must-haves’ in Auckland’s city fringe precincts is boosting sales activity, according to commercial property brokers Hamish Paterson and Jonathan Lynch from Colliers.
The brokers who primarily focus on commercial property sales in the Auckland City Fringe suburbs of Ponsonby, Grey Lynn, Eden Terrace, Mount Eden, Morningside and Pt. Chevalier say that almost $60 million of sales the two have been involved with in recent months highlights the depth in activity that is occurring, but the deals are not always hitting the headlines.
Paterson says that while there have been a number of properties coming to market through traditional marketing campaigns, there has been a similar shift upwards in the number of off-market deals occurring as well.
“In this low-interest rate environment with a more stable economic growth path projected, buyers are motivated and actively looking to bolster their returns by securing ‘must-have’ properties.
“On-market deal activity has been strong, which should be expected in this investment environment.
“Traditional on-market passive investment of land and buildings with secure tenant cashflow remains popular amongst buyers,” says Paterson.
Jonathan Lynch, investment sales associate director at Colliers says that there is a noticeable drive of late to secure mixed-use properties on the outskirts of the Auckland CBD due to the potential value uplift achievable from ongoing demand and favourable zoning provisions provided by the Auckland Unitary Plan.
Lynch says “any mixed-use properties with development opportunities and holding income are being aggressively targeted.
“However, it is not just the status-quo proving popular.
“There is a group of buyers moving steadily up the risk curve as economic prospects and underlying fundamentals improve. Many of the deals that we are involved in are for properties with vacant possession or those with an upcoming lease expiry
“Buyers are backing themselves to find a tenant in what is proving to be a more buoyant leasing market than expected six to 12 months ago.
“Alternatively, there are also a number of owner-occupiers that are looking to secure properties now with an expectation of occupying the property themselves due to future expansion plans.
“There is a real under-current of momentum which is seemingly a drive from buyers looking to secure their own premises or investors looking to time the next upswing in value as demand continues to outweigh supply,” says Lynch.
Paterson goes on to say that bolstering traditional sales activity is the off-market transactions, which can prove difficult to use as evidence if not fully explored.
“The more private nature of the off-market transactions means the reporting of these sales takes time to flow through to the normal statistical reporting process, leaving some ‘out of the loop’ when it comes to current market pricing.
“Combining results from the rise in off-market activity with our on-market deal analysis helps us keep both our buying and selling clients up-to-date with the latest market expectations.
“Often sales and yields are not the best measures, with sales rates per square metre proving more appropriate.
“This is critical in a fast-moving market as it maximises sales rates and minimises time wastage and the due diligence costs for our clients,” says Paterson.
Lynch also points out that the recent government announcement on bright-line test extensions and the removal of interest deductibility for existing residential property investment is likely to boost commercial sales activity further.
“Given the rise in additional paperwork and less investor benefits, it is hard not to expect a boost in enquiry and sales activity for both on and off-market campaigns and requirements over the next 12 months.”
Some of the more recent on-market campaigns in the City Fringe area the two leading brokers have been involved with include:
- 33 Sale Street, Auckland central, the former Clooney’s building, sold for $8,325,000
- 8 Walmer Road, a development site, sold for $2,250,000
- 13-15 Mackelvie Street, Grey Lynn, an underutilised office/warehouse sold for $5,250,000
- 57 Boston Road, Grafton, a highly visible mixed-use corner sold for $6,128,000
Off-market sales include:
- 2b Jervois Road, Ponsonby – a vacant retail property sold for $1,100,000
- 1/367 Great North Road - a vacant retail property sold for $1,350,000
- 3/2 Haultain Street, Mount Eden - a vacant warehouse sold for $1,400,000
- 359 New North Road, an office/showroom, sold for $1,650,000
- 2/19 Edwin Street, Mount Eden – a vacant office and warehouse property sold for $2,750,000
- 353 New North Road, a small warehouse with separate retail sold for $ 3,100,000
- 26b Williamson Ave, Ponsonby, a 3-level showroom/office building, sold for $3,700,000
- 9 Gordon Road, a large light industrial zoned office warehouse sold for $4,875,000
- 98 Newton Road and 78 France Street South, a future development site, sold for $6,250,000
- 60 Mt Eden Road, Mount Eden – a 2 level showroom/office sold to a part occupier for $3,150,000