Listings reflect ‘ Goldilocks economy’
Portfolio of 39 properties typifies ‘ neither hot nor cold’ market, reports Colin Taylor
Despite uncertainty created by the recent elections and a drawn- out end result, the commercial property market remains buoyant and unconcerned about any possible political risk, says John Urlich, commercial manager for Barfoot & Thompson.
Writing in the agency’s final Insite portfolio magazine for 2017, Urlich says the market has good reason to hold to this position “all things considered”.
As an example, the last quarter saw the agency’s commercial team recently complete four Auckland CBD and metropolitan transactions having a combined value in excess of $ 100 million. “The prospects of this great city are not slowing,” Urlich says.
The latest Insite portfolio contains 39 industrial, retail and office properties within the Auckland CBD, city fringe and suburbs — from Silverdale on the North Shore, down to Papakura in the south and out to Westgate in the west. Properties in Kaitaia, Gisborne and Ruakaka are included among those outside the Auckland area.
Urlich says that globally it i s emerging that the first signs of a coordinated and sustainable upswing in economic conditions is commencing.
“The growth rates of other OECD nations are all now approaching the levels that New Zealand has enjoyed over the last few years.
“Recent predictions are that even those that were worst affected since 2007, the likes of Japan and Europe, are moving towards annual GDP growth rates of 4 per cent. Overall, the forecast indices for global trade and hard commodity prices suggest continuing improvement for the course of 2017 and through to 2018. “When these trends are coupled with the fact that inflationary pressures continue to remain nominal, we have what is called a ‘ Goldilocks Economy’ — one that is neither too hot, nor too cold.”
Urlich says the only impediment to demand i s the possible further restriction on the availability of credit and mortgage finance that has so markedly affected the domestic residential market.
“However, to date the commercial market, which i s more attuned to lower loan to value ratios, has not seen a decrease in volumes with ‘ business as usual’ being due in no small part to the continued low vacancy rates and lack of available properties for sale. The management of credit by our banking system does, however, provide for a welcome fine balance that promises sustainable growth prospects.
“Hence, we believe it’s as good a time to buy, as it is to sell — which is a true restatement of the Goldilocks analogy,” Urlich says.
A feature listing in the new portfolio is a prominent Auckland North Shore corner property accommodating four multiple tenanted office buildings in the heart of Takapuna — “a stone’s throw from the beach”.
The sale presents an excellent investment opportunity, says Bruce Jiao of Barfoot & Thompson North Shore Commercial who, with colleague Gary Seekup, i s marketing 3,5,7,9 Anzac St for sale by tenders closing at 4pm on Wednesday, November 15, at the agency’s Hurstmere Rd office — unless sold earlier by negotiation.
The four two- to- three level buildings earn net annual rent of $ 479,808 and have a current vacancy rate of 25 per cent.
They have a combined building area of 2448sq m and occupy a total 3257sq m freehold parcel of land zoned Business Metropolitan Centre Zone- Precinct Takapuna, under the Auckland Unitary Plan.
A breakdown of the four individual titles is: 3 Anzac St 804sq m, 5 Anzac St 809sq m, 7 Anzac St 809sq m, and 9 Anzac St 835 sq m.
Seekup says the tenancies are a combination of short- term leases with demolition clauses in place. “This property’s future is in the form of a trophy development in the heart of the commercial hub of Takapuna,” he says.
“Resource consent has been granted for a five- level apartment development on the 3- 7 Anzac St land, with ground floor commercial units, and t wo levels of underground parking. The apartments wrap around a central glass atrium throughout the five levels.
“The property at 9 Anzac St was purchased by our client subsequent to the consent and provides considerable additional land over which the planned development can be expanded.
Seekup says the seven- year consent remains valid until March 2020.
The development envisages 480sq m of public plaza focused around the corner of Anzac St and Campbell Rd with existing mature trees, additional planted areas, a water feature, a largescale sculpture and a variety of public seating.
The commercial space at street level comprises 535sq m fronting Campbell Rd, onto the public outdoor area, and onto Anzac St. “The commercial units remain flexible and can be configured in a variety of ways to suit many uses.” Seekup says.
Also at ground level, five apartments totalling 548sq m would have a generous 266sq m private courtyard and garden. This floor would also have a building manager’s office and spa/ sauna area.
Plans for Levels 1- 4 call for a further 44 apartments with a total floor area of 4270sq m and decking of about 880sq m. Two basement levels would contain 124 car parks and 50 storage lockers. “The consented plans allow for flexibility of the apartment layouts,” Seekup says.
Close to home in the Auckland CBD, a freehold floor of 702.78sq min-cluding deck, leased by Barfoot & Thompson Commercial itself, is for sale on a high- profile corner of Bacons Lane and Kitchener St.
“It’s the third level floor in a fivelevel building and has views to Albert Park across the road and back over Chancery Square to High St,” says Reese Barragar who, with colleague Andrew Clark is marketing Level 3, 50 Kitchener St, for sale by tenders closing at 2pm on Wednesday November 8 — unless sold earlier by negotiation.
“This i s an opportunity to purchase a fully- leased top- shelf and passive investment property earning $ 211,901 plus GST net annually from a long- established and reputable tenant, with built in rental growth and a strong covenant,” Barragar says.
A Variation of Lease extends the initial term out to 15 years with a further six- year right of renewal giving a final expiry of March 31, 2034.
In the city fringe suburb of Grey Lynn, a well- located, two- level corner 1970s property is for sale with a mix of character office area, film editing studio and high stud space.
“The vendor is prepared to offer this property on a full leaseback, par- tial leaseback or vacant possession basis,” says Rex Fowler who, with colleague Nick Bernecker, is marketing Unit 3, 26 Putiki St, for sale by tenders closing at 4pm, Wednesday, November 15.
The unit with a building area of 787.3 sq m is held on a freehold site forming a total land area of 1269sq m. It is split evenly over two levels and includes 14 on- site carparks.
Earning total annual rent of $ 262,755, the property has a flexible Business- Mixed Use zoning with a height limit of 18m. “The unit has polished concrete floors, great natural light, low operating expenses and low unit management costs,” Fowler says.
Bernecker says Grey Lynn is experiencing a strong rejuvenation which includes developments like Vinegar Lane, the Cider Building and new Giltrap head office and showroom.
“These capital investments, with further development within Grey Lynn, will increase catchments and provide future opportunity for well positioned properties.”
Also for sale in Grey Lynn is a small 222sq m standalone industrial building on a 399sq m freehold site at 36 Monmouth St.
“Thought to have been constructed in 1966, it is split into two separate tenancies occupied by Celtic Solutions and Monmouth Glass Studio — and earns $ 33,091 annually,” says Murray Tomlinson who, with fellow commercial broker John Stringer, i s marketing it for sale by tenders closing at 2pm on Wednesday November 15 — unless it sells earlier by negotiation.
Stringer says the Business Mixed Use zoning provides for residential activity as well as predominantly smaller scale commercial activity. “The height limit of 16m occupiable and 2m roof form would potentially allow for up to five levels on this site.”