As New Zealand went into lockdown in March this year, commercial property investors were staring down the barrel of a grim year, as city offices, shops and factories emptied out.
But by the end of this year, the sector had racked up several billion dollars’ worth of sales, with big sums changing hands in just the last three months alone.
Bayleys' national director of commercial, Ryan Johnson, told OneRoof: “In the last nine weeks Bayleys has brokered 16 deals across office, retail, large format retail, industrial and medical, worth a total of $609 million. There's been such a frenetic change in pricing.
“Based on the investors’ appetite for income and yield, we’re expecting exceptionally strong volumes as the confidence comes back to the market in 2021.”
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Bayleys’ top commercial sale post lockdown was for Grant Thornton House at 215 Lambton Quay, in Wellington.
The 15-floor office tower with 1900sqm of retail space was refurbished by Willis & Bond in 2014 and the sale price of $84.5 million represents a 6 percent yield for the buyers, Stride Property.
Stride also announced it settled last week on its $228 million purchase of premium grade Deloitte office tower at 20 Customhouse Quay, Wellington, reportedly a record for the city.
“The confidence in the Wellington office market reflects the government occupation. There have been fewer transactions in Auckland, but we expect to see that start back up in the New Year,” Johnson said.
Other post-lockdown highlights include seven significant retail assets sold or settled this year for a total value of $229 million.
A pair of Countdowns in Orewa, north of Auckland, and Papakowhai, in Wellington, were snapped up by an Auckland-based buyer for more than $44 million in August.
The properties, marketed by Johnson and Peter Gorton, received multiple tenders from around the country, with investors attracted by the net combined rental income of $2.2 million.
Johnson said: “If anything, the Covid-19 scenario served to increase the amount of interest we received.
“The way that supermarkets kept trading and paying rent throughout the Covid-19 lockdown underlined the role that they play as an essential service and ramped up the appeal of these investment opportunities to new levels.”
Other retail property deals included Kelston Mall, in West Auckland, and Meadowlands Shopping Centre, in East Auckland. They sold for $43 million and $23.05 million respectively, representing yields of 5.86 percent and 5.72 percent.
Johnson said that locals dominated the market, with a new type of buyer emerging.
“[These] new X factor buyers were previously reliant on stable and secure income from other investments such as term deposits and bonds. With these no longer providing such [income], they’ve been highly active within the sector for passive commercial investments.”
Bayleys acted for a number of corporates in sale and leasebacks including Cavalier Bremworth, property at 7-9 Grayson Avenue, Papatoetoe that sold for $25 million, a yield of 6.4 percent.
Bayleys’ top industrial sale was for the Wilkinson Road, in Ellerslie, Auckland. The land and buildings are leased to NZME, owner of OneRoof, and sold for $54 million. Other top industrial sales were Hancocks’ site at Tidal Road, in Mangere, which sold for $25 million and 17 Ha Crescent, in Wiri, for $18.55 million.
