$10.4m deal underlines Hawke’s Bay strength
The $10.4 million sale of a prime commercial property is thought to be the largest Hawke’s Bay office transaction in a decade.
The multi-tenanted property at 100 McLeod St, Hastings, anchored by the Hawke’s Bay District Health Board, was recently sold by Colliers International broker Danny Blair for a yield of 7.1 per cent.
It was purchased in an off-market transaction from an investor who had renegotiated a long-term lease with the anchor tenant.
Blair says the price and yield achieved is a testament to the desirability of Hawke’s Bay commercial real estate.
This is backed-up by the latest Colliers’ confidence survey, which found more investors are optimistic about the region’s market performance than in almost a decade.
A net positive 16 per cent of respondents expect conditions in the Hawke’s Bay commercial property sector to improve over the next 12 months — the second-highest result since the survey began in 2008.
Blair says though the McLeod St deal is significant, it is far from unexpected in the current climate.
“There’s overwhelming evidence that Hawke’s Bay is now firmly on the radar of national property investors, and increasingly on the radar of international investors too,” he says.
“The McLeod St property was sold by an out-of-town vendor to an out-oftown buyer. Recent sales and strong national inquiry show this pattern is becoming very much the norm.”
Investor confidence has clearly been building in the Hawke’s Bay’s commercial property sector. In the first quarter of 2018, sales activity was the strongest in almost two years.
Recent CoreLogic sales data analysed by Colliers shows total commercial property sales in the first quarter of 2018 reached just over $47 million.
That will likely increase to $55m once reporting data catches up.
The industrial sector accounted for most of the transactions, but bolstering overall sales activity this year has been solid turnover in the office, retail and commercial mixeduse sectors.
Non-industrial commercial property transactions accounted for 41 per cent of the commercial sales value and 46 per cent of total sales activity so far this year.
Office and retail buildings are attracting regionally strong yields of between 6-7 per cent at the top end of the market, and up to 10 per cent depending on location, quality and covenant.
Blair says the recently sold property at 100 McLeod St is at the premium end of the market. “Built in 2004, the 4040sq m office complex is strategically located only 200m from Hastings Memorial Hospital, the main hospital in Hawke’s Bay.
“It is also only 100m from the Stortford Lodge roundabout, which is a major access point to Hastings’ main arterial routes, making it one of the most convenient and accessible places in the city.”