Commercial sales plunge $3b as prime asset shortage bites

The number of commercial property sales has slumped to its lowest level since 2011, according to a Colliers International report.

There were 2500 fewer transaction in the year to October and the total value of the sales was down $3.3 billion. The drop in activity was due to a shortage of buildings for sale, rather than a lack of investor appetite.

Investors were most often after higher-value assets, most of which were in Auckland, Colliers said.

Recent sales there include the AA Centre on Albert St for $47m, and a nine-property industrial portfolio for $69m. Colliers called Auckland the ‘‘$5m-plus sweet spot’’ for commercial property.

Commercial properties that sold for $5m or more accounted for 63 per cent of the total sales, but there had been a decline in sales in the $2m to $4.9m bracket.

Auckland accounts for 59 per cent ($2.7b) of all commercial sales, eclipsing other cities,

Colliers said.

Industrial properties remain a favourite, making up 38 per cent or $1.7b of the total sales value.

Half of the industrial sales were transactions of over $5m.

Office sales were a bigger chunk of the commercial property market than a year earlier, with sales up to 26 per cent, compared with 22 per cent the previous year.

Colliers research and consulting manager Leo Lee said New Zealand was in a new phase of the cycle as prime property for sale would continue to be scarce.

‘‘The evident decline in sales volume and value is predominantly due to the lack of assets for sale and demand for investment remains buoyant,’’ he said.

‘‘The value of New Zealand’s commercial property sales is lower compared with 2016, and this is no surprise considering the previous three years have been New Zealand’s most active, with sales such as the Millennium Centre in Auckland for $210 million.’’

Outside Auckland, commercial sales in Canterbury grew to 12 per cent of the total value, with $522m, while Wellington’s dropped to 6 per cent of the total, with $270m.

The report also reveals that Hamilton and Tauranga continue to be the regional hot spots. In Tauranga, an industrial warehouse in Newton St sold for $1.2m.