Restaurant sale presents golden opportunity

The freehold 1151sq m site has a lease with a final expiry date of 2035. Photo / Supplied

In the wake of recent auction successes, Colliers is offering a building housing a McDonald's restaurant in Clendon, Manukau, among a number of properties that will be go under the hammer at Colliers' Queen St office on April 29.

The property occupied by McDonald's on the corner of Roscommon Rd and Robert Ross Place has a 10-year lease that began in December 2007 providing a current annual net rental of $181,500 plus GST. The lease includes three six-year rights of renewal, taking the final expiry to December 2035.

Brokers John Davies and Hamish West, who are managing the sale, say the freehold 1151sq m property represents an excellent passive investment opportunity.

"Along with a long-lease to a global brand, it offers secure, compounding rental growth in the fast-growing Manukau location on a high-profile, freehold, corner site," says Davies.

John Bowring, national auctions manager for Colliers, says the agency's renewed focus on auctions is paying dividends.

"After a 2009 year in which the company auctioned 116 properties, of which 36 were between mid-November to the end of December, we got off to a strong start in 2010 and are now challenging the established players in the field," Bowring says.

The company's Metro properties auction in mid-March, was attended by over 100 people and resulted in all properties being sold with a minimum of 20 bids on each property and two properties receiving over 50 bids each. Yields ranged from 6.08 per cent up to 7.5 per cent across an order of sale which included the sale by Roger Seavill and John Davies of the Hollywood Bakery on 375 Manukau Rd, Epsom for $1,360,000 at a yield of 6.08 per cent. The 354.82sq m strata freehold property forms part of the original Clark & Matheson warehousing complex with Hollywood Bakery leasing its site on $82,738 per annum, on a 10-year term that started on August 1, 2009.

A building occupied by a local panel beating company on a 792sq m site at 15 Eden St in Newmarket, was marketed by Colliers brokers Bryce Holmes and Grant Magill, and sold by Bonnie and Gregory Chapman for $2.4 million at a yield of 7.5 per cent on its $179,906 annual rent.

Nearby a property at 2 Dilworth Avenue, Remuera, was sold for $1.71 million, or $1789 per sq m after being marketed by Colliers International brokers Bryce Holmes and Peter Kermode in conjunction with Barfoot & Thompson Commercial, for ABC Holdings NZ Limited. Built in 1912 and used for a large portion of its life as a mail sorting centre, the 545sq m building sits on a high profile 981sq m site on the corner of Remuera Rd and Dilworth Ave at the beginning of the "medical mile" leading down to Newmarket.

Out near the airport, a 2285sq m land area with Business 5 zoning and a project information memorandum (PIM) issued for a childcare centre was sold for $720,000, or $315 per sq m, at 12 Pavilion Drive, Airport Oaks. Marketed by Kermode and Hermann Trebitsch and Giles Were of Barfoot & Thompson Commercial for ABC Land Holdings NZ Limited, the greenfield site suits a range of commercial and light industrial uses.

"What made the March auction sing was the fact that we had good properties for sale, but not too many of them," Bowring says. "We saw some ferocious bidding and three of the five sold well in excess of reserve."

Bowring says that Colliers intends to pursue the method and has plans to auction many more properties than last year. He says Colliers has used auctions most effectively when selling significant portfolios for major companies and institutions.

Auctions are now a highly effective selling method across the range of commercial property because they engage initial buyer interest and convert it into a competitive bidding environment he says.

"Statistics show that auctioned properties sell in about half the time of private treaty, with sale prices that are often about 10 per cent higher."

Bowring says auctions have the potential to become the mainstream method of sale for commercial properties between $500,000 to $3 million in value and focusing on the "metro market" which is defined as commercial properties that are not residential or industrial within an area from Penrose to Pukekohe.

"We have owners looking to sell and cash ready buyers looking to invest. Good properties with great brands attached to them are always going to draw the most interest."