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october 2016 Welcome to our third and final INSITE Portfolio for 2016 This year more than all others in recent times one prevailing assumption has proven most true that direct investment in Auckland commercial property offers the most uncomplicated combination of both yield and capital gain in the New Zealand property market. This has been brought about by what has been another highly consistent year. The relatively strong performance of the New Zealand domestic economy coupled with positive net migration has made for strong demand for commercial property and particularly so in our largest city. Global concerns continue and consequently the likelihood of interest rate rises over the medium term seems unlikely. What better time to consider a property investment Vacancy rates across all sectors of the market are at historic lows. Industrial demand is such that we are seeing real increases in rental rates and expansion and development in the new peripheries of the city. Increased tenant demand in central Auckland is similarly driving new development with over 100 000 square metres of new office space now under construction. The retail sector continues to improve as evidenced by recent profit announcements and the news that consumer spending is increasing. Both occupiers and investors alike should be compelled to consider these market dynamics at present. Within the context of this environment our team of 70 plus agents located throughout the Auckland region have assembled this Insite portfolio of opportunities for your consideration. We look forward to introducing them to you and to assisting you in meeting your commercial property requirements. We wish you all the best for the forthcoming final quarter and festive season. GARTH BARFOOT Director KIRI BARFOOT Director PETER THOMPSON Director contents Commercial Property Listings 4 5 6 Ponsonby Road 244-252 Anzac Avenue 49-55 Great South Road 576-580 & Main Highway 5-7 7 8 9 10 11 13 Andromeda Crescent 10 Manukau Road 505-509 Mt Eden Road 15-19 Kitchener Street 40 CA CC CD CE Kitchener Street Level 5 50 Parnell Road 287-289 Dundonald Street 8 16 17 18 19 20 21 Great North Road 570 Shirley Road 14 Crummer Road 16-18 New North Road 1087 Dominion Road 1-6 428 430 & 448 Bolton Street 4 120 Ellerslie East Tamaki Epsom Grafton CBD CBD Parnell Eden Terrace Grey Lynn Grey Lynn Grey Lynn Mt Albert Mt Eden New Lynn 31 32 33 34 35 36 27 30 24 25 26 Ponsonby CBD 23 22 Plunket Avenue 41-43 Puhinui Road 257 Rosella Road 64 Gray Avenue 59-61 Elizabeth Knox Place 1 90 Neilson Street 321 Ellice Road 93 Wairau Road 108-110 Anzac Road 50 Ronwood Avenue 9 William Pickering Drive 51E Sawmill Road Fair Mall 6 Earl Richardson Avenue A 5 Great South Road 149 Great South Road 108 Verissimo Drive 27 Papatoetoe Papatoetoe Mangere East Mangere East St Johns Onehunga Wairau Valley Wairau Valley Browns Bay Manukau City Albany Riverhead Otara Manukau Manurewa Takanini Mangere DISCLAIMER Barfoot & Thompson and the vendor are not to be held responsible in contract tort or in any other way for any inaccuracy in omission from or other defect of whatever kind contained in this publication and the recipient waives any rights which it might have now or in the future against Barfoot & Thompson or the vendor in receiving this publication. The recipient also acknowledges that Barfoot & Thompson or the vendor do not give any warranties or other assurances regarding the correctness or accuracy of information contained within this publication. The contents of this publication do not form part of a contract. Auckland Property Market MARKET COMMENTARY COURTESY OF IAN MITCHELL DIRECTOR LIVINGSTON & ASSOCIATES Commentary A uckland s commercial and industrial property markets have continued their strong gains over the last year. Investor demand for good quality stock remains unsatisfied and combined with low interest rates and easy access to credit is resulting in some further downward pressure on yields. An overview of the key sectors within the market includes Central Auckland s office market is experiencing strong growth in performance driven by increasing tenant demand falling vacancy rates and ongoing rental growth. Pentup tenant demand for good quality space is resulting in increased development activity. There is now over 100 000 square metres of office space under construction. Suburban office market s performance has improved during 2016 with vacancy rates falling in most precincts. To some extent the lack of good quality vacant space within the CBD has encouraged tenants to consider options in other locations. Positive net absorption combined with a moderate level of development activity resulted in overall suburban office building vacancy rates falling by approximately 1.5% over the last 12 months. Development activity is also increasing in the suburban precincts with over 65 000 square metres of space under construction. The industrial building investment market continues to provide robust returns supported by low interest rates strong tenant demand low vacancy rates and growth in rental rates. The uptake in space has been limited by the amount of stock available for lease rather than a lack of demand. Strong growth in tenant and owner occupier demand combined with declining amount of vacant developable sites has resulted in upward pressure on land values. Mixed use zone sites are increasingly being purchased by investors looking at redeveloping them into residential which is placing further pressure on the existing stock of industrial properties. Higher land values combined with escalating construction costs is placing upward pressure on design build rents. The retail property market has continued to improve during the first nine months of 2016. Good quality vacant retail space is difficult to find for prospective tenants. Retailers sales volumes have increased although margins remain tight. Annual retail sales increased by 9.5% in the June 2016 year however consumer confidence fell to its lowest level in four years. The decline in the number of unemployed low wage growth and poor housing affordability appear to be weighing on consumers outlook. On the positive side growth in house values has increased household wealth and combined with low interest rates and strong population growth have supported the growth in total household spending which has benefited the retail sector. The economy is expected to continue to expand over the next five years with growth driven by low interest rates high rates of population growth supported by net migration gains increased levels of construction retail activity underpinned by population growth growth in the tourism sector and 2. BARFOOT & THOMPSON COMMERCIAL INSITE october 2016 slowly recovering commodity prices. Auckland region is expected to continue to be one of the fastest growing regions in the country with growth primarily supported by population growth in excess of 3% per annum. There is growing unease over the unaffordability of Auckland s housing stock and the long term implications it may have on the sustainability of the region s economy. Table 1 presents the trend in key market indicators by market sector. Table 1 Property Market Indicators Office Market Last 12 Months Vacancies Rents Down Prime Up Secondary Up Next 12 Months Down Up Industrial Last 12 Months Steady at low levels Up Next 12 Months Down Up Last 12 Months Steady at low levels Steady Retail Next 12 Months Flat Steady Short term outlook is for current market conditions to continue as Auckland s strong regional economy continues to grow demand from the occupier market. 4 000 Figure 2 Commercial and Industrial Building Sales Annual Office and Industrial Building Sales in Excess of 2 Million in Auckland 3 500 3 000 2 500 2 000 1 500 1 000 Office Buildings Figure 2 presents the growth in the value of commercial and industry building sales in Auckland region with sale prices in excess of 2million. 500 Industrial Buildings 0 The volume of sales during 2015 was down from the peak in 2014 and whilst the sales in the 2016 year to date reflect robust activity they are also at levels less than the peak in 2014. The volume of sales is limited by a lack of stock rather than investor demand or access to credit. Sales during 2016 will increase as more transactions are settled. The lack of good quality investment stock has resulted is some potential buyers considering markets outside Auckland. Table 2 summarises current yields by sector their outlook over the next six months and the level of investor demand. Table 2 Yields and Investor Demand by Sector Sector Typical Prime Quality Building Retail Office Industrial 5.00% to 7.50% 6.00% to 7.00% 5.75% to 6.50% Yields Typical Secondary Quality Building 5.0% to 7.50% 6.75% to 7.50% 6.25% to 7.00% Investor Demand Outlook Steady Steady Steady Strong Strong Strong Investor demand in the three sub markets has continued to outstrip the supply of buildings available for sale. Low interest rates and readily available credit are underpinning investor demand at current levels of return. Current yields demonstrate the strong competitive nature of the current market and perhaps do not always reflect the level of risk associated with individual transactions particularly for low valued properties. Every effort has been made to ensure the soundness and accuracy of the opinions information and forecasts expressed in this report. Information opinions and forecasts contained in this report should be regarded solely as a general guide. While we consider statements in the report are correct no liability is accepted for any incorrect statement information or forecast. We disclaim any liability that may arise from any person acting on the material within. BARFOOT & THOMPSON COMMERCIAL INSITE october 2016 2016 (YTD) 2000 2002 2003 2008 2009 2005 1998 2012 1999 2004 2006 2010 2007 2001 2013 2011 2014 1996 1995 1997 2015 3. 4. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx5. 6. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx7. 8. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx9. 10. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx11. Commercial 8. BARFOOT & THOMPSON COMMERCIAL INSITE august 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx13. CASE STUDIES 8D ROWE STREET ONEHUNGA Sales Methodology Auction unless sold prior. Client Objective To achieve the maximum realisation of a family owned property using Barfoot & Thompson s highly acclaimed auction process. Property Description A unit title industrial building 175m in total with two roller doors and three car parks. Located a short distance from the Onehunga retail precinct and train station. Having two toilets and two power meters allowed for split tenancy. It was 50% occupied and was due to be completely vacant on 30th January 2017. The passing rent was 11 500 pa plus GST and outgoings. Campaign Summary The property attracted the attention of many owner occupiers and investors. With the property on the market for less than 24 hours a pre-auction offer was acceptable to the vendors. The auction was duly brought forward with all registered parties having been notified. Result On the auction day there were nine bidders in the room and two telephone bidders. The property ultimately sold to an owner occupier for 630 000 which was 180 000 above the pre-auction offer far exceeding the vendor s expectations as such they were delighted with the outcome of the process. This price represented 3 600m on land and buildings. 14. BARFOOT & THOMPSON COMMERCIAL INSITE october 2016 58 FROST RoaD MT ROSKILL Sales Methodology Deadline Private Treaty unless sold prior. Client Objective To have the property marketed via a no-price process to achieve the maximum realisation within a defined time frame. Property Description A standalone 1 327m industrial site with 1 250m of improvements located in Mt Roskill. The property was offered to the market with vacant possession. Campaign Summary The agents received 48 enquiries from investors developers and owner occupiers within the first two weeks of marketing. Result Due to the demand the deadline date was brought forward and the property ultimately sold to the next door neighbour for 1 300 000 or 1 040 per square metre for land and building. 14 COWLEY PLACE ROSEDALE 568 TE ATATU ROAD TE ATATU PENINSULA Sales Methodology Tender unless sold prior. Client Objective To capitalise on favourable market conditions leverage off Barfoot & Thompson s extensive network using its robustly managed tender process. Property Description The property comprises a significant commercial holding 100% leased office warehouse and excellent yard car parking provision constructed circa 1995 on a fee simple title. The total building net floor area is 480.7m on 1 080m of land with an income of 80 000 p.a. plus GST. Campaign Summary The property was well received with a total of 52 enquiries from investors developers and owner occupiers. Eight tenders were received with the three top tenders being very close. Result The property ultimately sold to an investor for 1 712 000 representing a yield on purchase price of 4.67%. This price exceeded the vendors expectations who were delighted with the outcome. Sales Methodology Deadline Private Treaty unless sold prior. Client Objective To have the property marketed via a no-price process to achieve the maximum realisation within a defined time frame. Property Description A single level retail property built in the early 1970 s comprising of two shops and 10 car parks to the rear of the building returning 60 778 GST p.a. net. Total floor area of 280.6m . Fee simple site of 493m zoned Town Centre. Campaign Summary Strong market interest with 56 enquiries and eleven offers (six unconditional including top three which were below 5.3% return). Result Sold for 1 260 000. The vendor was very pleased with the outcome. BARFOOT & THOMPSON COMMERCIAL INSITE october 2016 15. 16. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx17. 18. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx19. 20. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx21. 22. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx23. 24. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx25. 26. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx27. RECENT SALES FROM AUGUST 2016 Unit 10 16 Wainui Rd Silverdale 203m Retail building. Sold for 2 078 000 - Gary Seekup & Bruce Jiao 27-29 Thomas Peacock Pl St Johns 1 154m of buildings in two separate units with a short term lease of 150 000 pa sold for 2 630 000 or 5.7% - Mike Jensen 79-81 Felton Mathew Ave St Johns (leasehold) 2009m building on 4 229m leasehold site with a ground rent of 94 500 pa sold for 590 000 - Mike Jensen 31 Victoria St Onehunga 6 522m site provided a passing net income of 200 000 plus GST outgoings. It had a site coverage of 13% with 856m of high stud warehousing. Marketed with an asking price it sold for 3.5 million representing 537 m for land or 5.7% yield - James Marshall & Nick Wilson by well-known retailers and companies such as Farmers The Warehouse ASB Bank Countdown Supermarket Chemist and Post office etc - Rob Taylor & Jane Chen 14 Cowley Pl Albany 480m Industrial building 365m warehouse 115m office on 1 080m Land. Returning 80 000.00 at 4.6% yield. Sold for 1 712 000 - Chase Erceg & Yi Wei Lowndes 82 Hillside Rd Wairau Valley 475m Industrial building 388m Warehouse 87m office on 1 214m land. Sold for 1 400 000 - Josh Warren & Chris Brosnahan 4 40 Arrenway Drive Albany 107m Office returning 29 840 net pa. Sold at Auction for 520 000 - David Goodhue 20F Gills Rd Albany 455.4m industrial building with six car parks. Sold for 855 000 - Chase Erceg Matt Kirkbride & Gary Seekup 7-9 Lagoon Drive Panmure 4 970m site located on the Panmure roundabout. Currently leased to 4 short term tenants and returning 160 500 sold for 7 000 000 or 1 408 m land and buildings - Cam Paterson & Mike Jensen 124 Captain Springs Rd Onehunga A freehold standalone property comprising 1 343m of land and 944m of warehouse with showroom and office. The property was on the market for 48hrs with 3 unconditional offers received and sold on the second evening. Sold vacant possession for 2 050 000 representing 2 172 m for land and building - James Marshall & Nick Wilson Unit 1 & 3 135 Pakuranga Road Pakuranga Sold for 3 000 000. Unit 1 - Investment property with current tenant Westpac Bank - Building Area 283m . Unit 3 Investment property situated in the well established Pakuranga Plaza - Building Area 193m . Both units are surrounded 17 Clayton Rd Manurewa Freehold Property - Building 164m Land 799m . Sold for 671 000. This property has been operating as a Child Care Centre since at least 2002 - Michael O Brien & Craig Brunt 28. BARFOOT & THOMPSON COMMERCIAL INSITE October 2016 Unit I 55 Sainsbury Rd Mt Albert Sale Price 836 000. This is a little gem extremely well located in Mt Albert this 1 year old cafe business with a very switched on business owner is breaking all the records Roger Revell 321m mezzanine area of 34m and an Ancillary Unit area of some 310m - Rob Taylor 29 Nixon St Grey Lynn Strategic Grey Lynn warehouse on 265m mixed use land sold off-market for 1 325 000 with vacant possession representing 5 000 m on land - Reese Barragar 205 Federal St Auckland Central A street level retail unit fitted out as a local retail convenience store approx 60m sold for 525 000 or 5.5% - David Palmer 72 Remuera Rd Newmarket A 280m property on 640m site sold off market for 3 850 000 at 6 017 m on land - David Palmer & Graeme McHoull 13 High St Auckland Central 98m high profile CBD basement retail unit sold vacant possession for 800 000 or 8 163 m - John Stringer 741 Te Atatu Rd Te Atatu Peninsula Profile corner site of 4442m Business zoned land under PAUP. Mixture of older warehouse and office of 1800m vacant possession. 3 350 000 - Murray Tomlinson 35 Timothy Pl Avondale Standalone industrial returning 115 000 net per annum on a new 5 x 5 year lease. 674m warehouse and 229m office. Sold for 2 255 000 at a 5.1% yield Reese Barragar Chris Peterson Duane Mullooly 636 New North Rd Morningside Family owned since 1933 this standalone freehold building of some 257m on 506m of mixed use land sold to an owner-occupier for 1 775 000 Reese Barragar 35-39 George St Kingsland A typical two level city fringe 1 400m office building on 1 281m of land with basement car parking sold for 4 650 000 - Murray Tomlinson & Cam Paterson Unit 5 & 6 19 Vernon St Papakura Sold for 770 000. Unit 5 comprises (more or less) of warehousing of 305m mezzanine area of 52m and an Ancillary Unit area of some 28.51m . Unit 6 comprises (more or less) warehousing of BARFOOT & THOMPSON COMMERCIAL INSITE october 2016 29. 30. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx31. 32. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx33. 34. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016xxxxxxx35. 36. BARFOOT & THOMPSON COMMERCIAL INSITE OCTOBER 2016 Acknowledged as industry leaders Barfoot & Thompson is committed to being the best real estate agency around. We re thrilled to be recognised for providing our clients with outstanding service and results by winning coveted industry awards. Asia Pacific Property Awards Best Real Estate Agency in New Zealand - 3 years running Named Best Real Estate Agency in New Zealand at the Asia Pacific Property Awards celebrating the highest levels of achievement sectors in real estate for 2014 15 2015 16 and 2016 17. Best Lettings Agency New Zealand - 2 years running Recognised as providing the best property management services in New Zealand for 2015 16 and 2016 17. Highly Commended Real Estate Agency Marketing New Zealand 2016 17 Outstanding marketing of The Antipodean. Award Winning Website Highly Commended Real Estate Agency Website New Zealand 2016 17 Asia Pacific Property Awards Global Winner Best Mobile Website 2016 Leading Real Estate Companies of the World Reader s Digest Quality Service Award - 2 years running Voted for by the New Zealand public for exceptional levels of customer service in 2015 and 2016. REINZ Large Agency of the Year All Disciplines 2016 Recognised as New Zealand s best large real estate agency of the year by the Real Estate Institute of New Zealand. our commercial offices city L3 50 Kitchener Street Phone. 64 9 358 0989 Fax. 64 9 358 4048 commercial barfoot.co.nz NORTH SHORE Ground Floor 129 Hurstmere Road Phone. 64 9 489 3880 Fax. 64 9 489 3884 nscommercial barfoot.co.nz SOUTH AUCKLAND L1 24 Cavendish Drive Phone. 64 9 263 8412 Fax. 64 9 263 8419 sacommercial barfoot.co.nz PROPERTY MANAGEMENT L1 4 Morgan Street Newmarket Phone 64 9 306 2088 Fax. 64 9 306 2089 pmcommercial barfoot.co.nz LOCAL SPECIALISTS Pukekohe Whangaparaoa Whangarei 64 9 238 7019 64 9 424 6111 64 9 438 3079