Well-located and tenanted retail properties continue to attract strong competition, with two selling at yields of below 6 per cent at Bayleys' first Total Property commercial and industrial auction for the year.
A total of 11 out of 14 properties offered for sale at Total Property auctions in Auckland and Tauranga sold at a total value of over $16 million, with negotiations continuing on passed-in offerings.
The top under-the-hammer price of $3,350,000 was paid for a redeveloped property at 120 Main Highway on the corner with Ladies Mile in Ellerslie Village.
It sold at a 5.9 per cent yield through Tony Chaudhary of Bayleys Manukau; and Damian Stephen and Michael Block of Bayleys North Shore Commercial.
It comprises a 700sq m, single-level building on an 887sq m site which previously housed a petrol station, a workshop and Raviz Indian restaurant. Block says it underwent a major makeover last year to accommodate an additional restaurant tenant, Mexico Food and Liquor. The restaurant occupies converted workshop space with the former service station forecourt area sheltered by an overhead canopy that is being used as an outdoor courtyard. Mexico Food & Liquor has a new eight-year lease and Raviz a six-year lease.
Bidding on the property progressed quickly to $2.5 million and then in $50,000 jumps until it was declared on the market by auctioneer Richard Valintine at $3,150,000, followed by a long sequence of mainly $10,000 and $5000 bids.
Also attracting big bidding was a 412sq m Dick Smith store, in a high-profile strip-retail location directly opposite the LynnMall shopping centre at 3045 Great North Rd, New Lynn, which sold for $2,470,000 at a 5.4 per cent yield through Alan Haydock and Damien Bullick of Bayleys Auckland.
DSE(NZ) has been in occupation since 2001 and has recently renewed its lease for four years.
Bidding started at $1.5 million and the property was declared on the market at just over $2 million. Two bidders then fought it out, with a further 33 bids generating an additional $430,000 for the vendor.
Bayleys commercial and industrial manager John Church says these sales followed on from the sale of a Mangere retail property at a 4.5 per cent yield at a Greater Auckland auction. "This reconfirms that yields are showing no signs of softening despite the first of what is likely to be a sequence of interest rate rises by the Reserve Bank," Church says. "Strong competition for properties is keeping yields low with demand still outstripping supply even although there's been an increase in listings in the first quarter of this year."
He says a significant proportion of bidders on Auckland retail offerings continue to be local Indian and Chinese investors, who have a strong preference for this type of property.
Land is also in hot demand, with a big pick up in development activity and the return of land bankers fuelling demand for development sites.
A 3918sq m site at 48 Mays Rd, Onehunga, zoned Residential 6A, which permits one residential unit for every 375sq m of site area, sold for $2,710,000 at $692 per sq m through Quinn Ngo and James Chan of Bayleys Auckland. Bidding on this property started at $1.85 million and it notched up a total of 60 bids.
The property, owned by two generations of the one Chinese family for the past 70 years, was used with a neighbouring property for commercial flower growing until about 10 years ago, but is now surrounded by high-density residential housing. The only buildings on the site are a double garage and a shed used for storing tractors and other horticultural gear.
Also attracting strong interest at the Total Property auction was a 288sq m site at 128 Manukau Rd, Epsom, containing a 125sq m renovated dwelling, previously used for commercial and residential purposes. It sold with vacant possession for $905,000 through Quinn Ngo and Amy Ou Yang of Bayleys Mt Eden, after being declared on the market at $800,000,
The largest property offered for sale, an extensively refurbished 1008sq m mixed-use heritage building on a 966sq m corner site at 151-161 Mt Eden Rd, Mt Eden, generated good bidding before being passed in at $5,060,000, equivalent to a 5.9 per cent yield.
Other properties to sell out of the Auckland Total Property offerings:
654 Dominion Rd, Mt Eden: 430.5sq m split-level premises on about 539sq m of land with access also off Rocklands Ave sold vacant to owner-occupier for $1.3 million through Haydock and Bullick of Bayleys Auckland. A single-level retail building on Dominion Rd and a modern two-level adjoining building developed on the rear section in the early 1990s, the property was previously occupied by karaoke bar.
A 354sq m Buffet King Family Restaurant and Bar in Pacific Square Retail Plaza at 792 Great South Rd, Manukau, opposite the Vodafone Pacific Events Centre, sold for $1,090,000 at an 8.25 per cent yield through Tony Chaudhary and Janak Darji, of Bayleys Manukau. It has a seven-year lease from 2010, with two six-year rights of renewal.
In the same retail complex, the 86sq m Vista Cafe, in occupation since the Pacific Square Retail Plaza's opening in 2006 on a 10-year lease, was sold for $605,000 at a 7.8 per cent yield through Chaudhary and Sarah Prebble and James Valintine of Bayleys Auckland. It has two-yearly rent reviews to the Consumer Price Index with the next adjustment due in May.
A 500sq m unit in a substantial, mainly bulk-retail complex at 57 Cavendish Drive, Manukau, occupied by national retailer Music Works which exercised the second of three two-year rights of renewal last year, sold for $835,000 at a 9.3 per cent yield through Geoff Wyatt and Tony Chaudhary of Bayleys Manukau.
A 156sq m road-front industrial unit, with large roller-door access to a warehouse and well-appointed offices, shower and kitchen, at 18-20 Ashfield St, Wairau Valley, sold vacant for $312,000 through Matt Mimmack and Trevor Duffin of Bayleys North Shore Commercial.