Auction abuzz as six go under the hammer

Simon Clark says there had been a noticeable uptick in interest in the Tauranga commercial investment property market since the election.

Colliers International held its busiest local commercial auction for years last week, says Simon Clark, investment sales director for the firm in Tauranga.

Six properties were sold during the auction for $9.7 million, with another, the new Bethlehem Birthing Centre, being sold by private treaty two days prior to the auction for approximately $7 million.

"It was certainly the most active auction I have seen for several years," he said. "It's very rare to get so much quality interest in investment stock at one time." The auction attracted 70-to-80 potential investors.

Mr Clark said there had been a noticeable uptick in interest in the Tauranga commercial investment property market since the election.

"Post-election, we have seen a massive amount of enquiries and a lot of out-of-town interest," he said.

"Tauranga is starting to grow and we're getting buyers from all over the country."

Priority One chief executive Andrew Coker confirmed the agency was continuing to get enquiries from businesses looking to shift to Tauranga.

"What it reflects for property buyers is a genuine confidence that there's interest at the tenant level and they're prepared to invest on the back of that," he said.

Mr Clark said the latest auction was significant in that the properties all had solid long-term tenancies, ranging from four to 12 years.

In addition to the Bethlehem Birthing Centre, the properties sold included the KFC in Newton Street, Mount Maunganui, and another warehouse/office space in Newton Street, the Hannahs retail shop at 41 Devonport Road, and properties in Fraser Cove leased to DK's Seafood, Jesters Pies, and retailer Cotton On.

The highest yield was 7.5 per cent on the Bethlehem property, with other yields ranging from 6.1 per cent to 7.1 per cent.

The lowest and most notable yield was 5.23 per cent for the KFC site in Mount Maunganui, which was sold for $3.4 million and leased back by Restaurant Brands for 12 years.

"That's a really low yield - it's almost bank deposit rate low," said Mr Clark.

"But the buyer is paying more for a fixed tenant.

"It's an absolute flight to safety where you've got a built-in, gilt-edged tenant."