By COLIN TAYLOR
City fringe property sales are riding high, with Barfoot & Thompson Commercial reporting the sale of 45 fringe properties during the past three months for $60 million.
Fringe property is defined as any commercial real estate just outside the limits of the central business district, and includes suburbs such
as Herne Bay, Ponsonby, Grey Lynn, Newton, Parnell, Newmarket, Kingsland and Morningside.
Rick Hamilton and Warwick Lewis, who specialise in city fringe sales for Barfoot & Thompson Commercial, say the demand for fringe properties far exceeds supply. Some commercial properties on the city fringes have more than doubled in value in the past three years and they often field between 100 and 160 inquiries for each property.
Hamilton says the majority are former warehouses and small factory buildings only two or three floors high dating from the 1970s onwards.
"More recently, many have been used by small businesses like car mechanics, spray painters and panel beaters, but they are now being forced out of these mixed-use areas because of office and residential apartment areas developing around them.
"A panel beater can no longer justify paying rental of up to $150 per square metre for an inner-city fringe location and so this type of business is moving out to West or South Auckland where the rents are more like $50 a metre."
Hamilton says having a city fringe warehouse and distribution facility remains an advantage for some specialised importers who sell high-value, lightweight products such as computers, jewellery and high-fashion products to CBD corporates and retail outlets.
"These generally have fast stock movements and little need for extensive storage areas. Having direct delivery to a city fringe premises can significantly reduce high transportation and handling costs."
Lewis says there are two main city fringe buyers - second-tier business owner/operators employing fewer than 20 people and commercial property investors.
"Small to medium companies with most of their business undertaken in the CBD are sick of paying high parking fees and buying a city fringe building with half-a-dozen carparks is often the perfect solution for them," Lewis says.
It's also usually much easier and cheaper for staff coming in from the suburbs to find parking in the city fringes than in the CBD, and most city fringe property is located close to motorway on and off ramps.
"In addition, owners can look forward to a good capital gain on their investment, which is a reason why property investors are also interested in buying the same properties to lease out."
Lewis, a 20-year veteran of the commercial property market, says the appeal of city fringe property is that it's affordable and tangible.
The price range, which starts at around a million dollars, is affordable for smaller investors, family trusts and owner occupiers.
Hamilton says buyers of fringe city properties tend to hold on to them for three or four years and "put their own stamp" on the buildings with internal renovations, while retaining the original shell.
He predicts that "Kingsland is going to explode property-wise in the next few years" and cites a 1970s stand-alone office warehouse in Grey Lynn bought for $500,000 three years ago which recently changed hands for $1.1 million.
"In the same area I also recently sold a modern stand-alone office/warehouse/showroom combination in Rose Rd. I showed more than a hundred people through and it ended up selling at auction for $1,160,000."
Hamilton says he usually manages one full auction and tender programme for city fringe property each month but many sales are transacted off-market.
Recently he sold the Irish Society hall in Great North Rd, Grey Lynn, at tender for $1.3 million. It was the former Star movie theatre - a 70-year-old building complete with a classic ballroom and full bar facilities. Potential buyers wanted it for a wide range of uses including a church, a refurbished movie theatre and a kick boxing gym.
In Herne Bay, Warwick Lewis fielded 160 inquiries for a Jervois Rd property that consisted of two character retail shops with accommodation above. It sold at tender for $1.55 million.
"I've also had about 130 inquiries on an office warehouse in MacKelvie St in Ponsonby which sold at auction for just over a million dollars."
Lewis is currently focused on two commercial character villas at 9-11 St Marys Rd, Ponsonby, which are being sold with 10 parking spaces.
By COLIN TAYLOR
City fringe property sales are riding high, with Barfoot & Thompson Commercial reporting the sale of 45 fringe properties during the past three months for $60 million.
Fringe property is defined as any commercial real estate just outside the limits of the central business district, and includes suburbs such
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