The Tauranga commercial property market is being described as the "perfect storm" with real estate companies reporting a spike in sales and inquiries from out of town investors.

Colliers International Tauranga managing director Simon Clark said the city was under the spotlight and considered "a safe haven to invest" due to its growth.

It had about 180 inquiries for an auction held on Thursday where four properties sold under the hammer for $7.8 million in total - while another two were under negotiation.

A warehouse at 11 Newton St in Mount Maunganui with a 4.7 per cent return attracted 25 bidders and sold for $1.41 million, which was unprecedented, Mr Clark said.


"I have never seen so many bidders in the room for one property and it's really indicative of the investor appetite at the moment. A 4.7 per cent return is also a record in our market."

It was driven by people looking for good assets with secure tenants and low interest rates that "is pushing the market to new levels".

"They are getting such poor returns in the bank and they can borrow money at record lows. It's the perfect storm which is not going to change for a while until you see the interest rates rise."

Ray White Commercial Tauranga leasing and sales team leader Philip Hunt said the commercial and industrial property market "is as strong as I have known it in 15 years in the industry".

Demand was growing and its sales and leases "are nearly 50 per cent ahead of this time last year". "This has created an expansion of our operation with additional support staff being engaged to handle the increased transactions."

The influx of new residents into the greater Tauranga area provided the city with a sustainable commercial market, he said.

"This is further shown with the dramatic increase in activity in the CBD with strong inquiry for retail tenancies and a shortage of high quality first floor office space is becoming apparent.

"The spin-off for the city is quite simple - more businesses relocating here creating more employment and opportunities."

Bayleys Tauranga commercial manager Dickie Burman said activity in the commercial marketplace had been steadily improving over recent months.

"A case in point is a CBD investment property that has come on to the market in the last 14 days has seen over 50 inquiries seeking full details on the property."

However, investors were also looking outside the CBD for commercial purchasing opportunities.

"The development on 17th Ave where the Te Wananga o Aotearoa, Blind Foundation and other commercial office businesses are based has seen all the available opportunities to purchase, competitively snapped up. Commercial property in Mount Maunganui is also keenly sought after and remains tightly held."

Meanwhile, its residential sales teams were seeing more cashed up buyers coming to Tauranga to live "and many of these are looking for other investment opportunities that include commercial and industrial investment properties". "All this bodes well for Tauranga. I do not see demand easing anytime soon."

However, demand had put pressure on yields, he said. "A year ago yields of between 6 per cent to 7 per cent were being achieved, we are now seeing these drop to 5 per cent to 6 per cent."

Property up to $5 million was in most demand, he said.

Priority One projects manager Annie Hill said commercial investment was extremely important to the city.

"It is a very good indicator of economic growth, reflecting confidence by investors and a strong, and expanding business community and job growth.

"In addition, strong growth in commercial building consents is a reflection of a more productive economy."

Tauranga was increasingly being seen as a viable place to do business.