Small businesses snap up unit space

A vacant 498 sq m, 25-year-old industrial building at 67-73 View Road sold for $640,000. Photo / Supplied

While experts agree that the economic recovery is patchy, commitment by small business tenants appears to be on the up, if the industrial unit leasing and sales market on the North Shore is anything to go by.

Trevor Duffin, a sales and leasing specialist for Bayleys North Shore Commercial, says that in March this year he had at least 10 small vacant industrial units available for lease, with some having been on the market for more than six months.

In the past 10 weeks, however, he has leased nearly all of them to small businesses and says he would be hard pushed to find something for a tenant wanting a unit of 100 to 200sq m in the North Shore's Wairau Valley.

"Everything I had available has now been let to new businesses where owners have relocated either from a residential base, such as their own homes, or who have been operating out of lock-up storage units.

"The Wairau Valley business precinct has always been very popular, but in the eight years I have been leasing property there, I've never had so many start-up business inquiries," Duffin says.

"Nine such leases in just over two months can't be a coincidence. That must surely signal a trend, even though the businesses are quite varied, with two of them being self-employed mechanics, three importers and the balance from other industries."

All were in the Wairau Valley and ranged in size from 98sq m up to 273sq m. Rentals range from $12,137 to $21,000 a year and the units are in industrial enclaves in Ashfield Rd, Parity Place, Silverfield St, Hillside Rd, Ellis Rd and Ascension Place.

Duffin says the leases averaged around $110 a square metre and were mostly for two years, fairly typical for the Wairau Valley. He says many of the units were left vacant after larger companies rationalised their space during the economic downturn.

"Some also simply closed up shop and one or two went bankrupt when the recession left a difficult trading climate. However, since the start of this year there seems to be much more confidence in the market. We've seen quite a substantial lift in inquiry for both industrial and commercial premises recently, especially at the smaller end of the scale."

According to Bayleys Research, Wairau Valley has remained comparatively steady overall in terms of supply and demand throughout the downturn, mainly because of its well-established businesses and the slowdown in development activity which has helped to cap the North Shore's vacancy rates.

Duffin says there has also been good owner/occupier interest in vacant premises in the precinct and he has been involved in a number of sales recently in this sector of the market.

"Purchasers tend to be more established companies who are moving up from leased premises or are expanding their businesses and are looking for more space."

One of Duffin's most recent sales was a 763sq m unit at 101-111 Diana Drive for $850,000. Built in the mid 1980s, it is part of a multi-unit development and comprises approximately 483sq m of warehouse and 280sq m of office and amenities. The purchaser was a neighbouring owner/occupier.

"The property was sold with an 18-month settlement because the current owner has a couple of contracts tied in with the Rugby World Cup and is looking to slowly wind down his business," says Duffin. "The purchaser was also keen to take the opportunity to position his business for future expansion."

A vacant 498sq m, 25-year-old industrial building at 67-73 View Rd was also sold for $640,000 by Duffin and Bayleys North Shore Commercial colleague Laurie Burt.

It comprises a 298sq m warehouse, ground-floor office space of 70sq m and a mezzanine office area of 119sq m and was sold to a business previously leasing premises.

In another smaller transaction, Duffin sold a 227sq m industrial unit at 77 Porana Rd, in an industrial complex behind the Appliance Shed retail outlet, for $321,000.

"It was purchased by a dental equipment repair company wanting to make the step up from leasing premises by investing in a tidy industrial unit."

Also selling vacant in the same street for $350,000 was a 334sq m industrial unit. The two-level unit at 78 Porana Rd was sold by Ranjan Unka and Greg Healey of Bayleys North Shore Commercial.

They also sold a 402sq m two-level industrial unit, with eight car parks, at 6 Argus Place for $725,000.