Royal Tavern sale boosts already buoyant commercial property market

The Royal Tavern, one of Napier's oldest pubs, will be demolished following its sale after several years on the market. Photo / Warren Buckland

The sale of the historic Royal Tavern for redevelopment is proof of an "excellent" Hawke's Bay commercial property market "the best we've ever seen", says Colliers International broker Dan Walker.

"At the time of selling, the property also had back-up offers on it, with terms agreeable to the vendor," he said.

"This means after not selling for several years we could have sold it at least twice in the last month."

Building vacancies were "drying up rapidly" which was a good indicator of market strength.

"Last week a multi-millionaire cruise ship passenger got off the boat, walked around town and bee-lined it to our offices saying, 'You have no vacancy in this town, so I'm going to buy something'.

"Low vacancy - that was all he needed to know."

LEP Group Development Manager Rory O'Connor said the tavern would be demolished in March and building started on a childcare centre in April.

The site was purchased by LEP2, an Auckland-based development company that developed the Lollipops childcare centre in Ahuriri, but the new building may not be home to a Lollipops.

He said Hawke's Bay, particularly Napier, was an area with good growth prospects "and are looking forward to completing further projects".

The Royal Tavern is one of Napier's oldest pubs, moved to the corner of Chaucer Rd and Carlyle St from the Ahuriri spit more than 150 years ago where it was often flooded.

In 2010 it was passed in at auction after bidding failed to reach reserve and closed in 2014 due to rising costs and poor patronage. The same year the asking price was dropped from $700,000 to $400,000 but despite considerable interest the 1.324sq m corner property was not sold.

The later part of last year saw a flurry of Hawke's Bay sales including The Warehouse Hastings building for more than $4m more than it did in 2011, receiving eight offers after five days on the market with Bayleys.

Bayleys sales for the last quarter of 2016 include Roosters Brew House sold for $850,000, Waverley Aged Care in Greenmeadows sold for $1.6m, Edgewater Motor Lodge in Napier for $3.75m and a multi-tenanted Maraekakaho Rd building in Hastings for $1.3m.

Colliers International recent sales included the Porse building in Havelock North for $4.4m, a 3280sq m industrial property in Onekawa's Niven St for $4.51m, in Hastings the AMI building for $1.23m, the SBS Bank building for $3m (5.68 per cent yield) and Focal Point Cinema for $2.3m.

Other Colliers Hastings sales include HSM Group St Aubyn St building and the Bay Espresso building and adjoining accommodation on Karamu Rd.