‘Mixed-use must-haves’ boosting sales activity

A surge in buyers eyeing up ‘mixeduse must-haves’ in Auckland’s city fringe precincts is boosting sales activity, according to commercial property brokers Hamish Paterson and Jonathan Lynch from Colliers.

The brokers who primarily focus on commercial property sales in Auckland City Fringe suburbs including Ponsonby and Point Chevalier, say that almost $60 million of sales the two have been involved with in recent months highlights the depth in activity that is occurring, but the deals are not always hitting the headlines.

Paterson says that while there have been a number of properties coming to market through traditional marketing campaigns, there has been a similar shift upwards in the number of offmarket deals occurring as well.

“In this low-interest rate environment with a more stable economic growth path projected, buyers are motivated and actively looking to bolster their returns by securing ‘must-have’ properties.

“On-market deal activity has been strong, which should be expected in this investment environment.

“Traditional on-market passive investment of land and buildings with secure tenant cashflow remains popular amongst buyers,” says Paterson.

Jonathan Lynch, investment sales associate director at Colliers says that there is a noticeable drive of late to secure mixed-use properties on the outskirts of the Auckland CBD due to the potential value uplift achievable from ongoing demand and favourable zoning provisions provided by the Auckland Unitary Plan.

Lynch says “any mixed-use properties with development opportunities and holding income are being aggressively targeted.

“However, it is not just the statusquo proving popular.

“There is a group of buyers moving steadily up the risk curve as economic prospects and underlying fundamentals improve. Many of the deals that we are involved in are for properties with vacant possession or those with an upcoming lease expiry.

“Buyers are backing themselves to find a tenant in what is proving to be a more buoyant leasing market than expected six to 12 months ago.

“Alternatively, there are also a number of owner-occupiers that are looking to secure properties now with an expectation of occupying the property themselves due to future expansion plans.

“There is a real under-current of momentum which is seemingly a drive from buyers looking to secure their own premises or investors looking to time the next upswing in value as demand continues to outweigh supply,” says Lynch.

Paterson goes on to say that bolstering traditional sales activity is the off-market transactions, which can prove difficult to use as evidence if not fully explored.

“The more private nature of the off-market transactions means the reporting of these sales takes time to flow through to the normal statistical reporting process, leaving some ‘out of the loop’ when it comes to current market pricing.

“Often sales and yields are not the best measures, with sales rates per square metre proving more appropriate.”