The latest Covid-19 restrictions have posed many challenges, but Colliers believes the commercial and industrial property market remains very strong as it approaches the final quarter of the year.
While there was a large amount of uncertainty during the Alert Level 4 restrictions in 2020, this time around, investors and developers have been unperturbed.
Gareth Fraser, director of investment sales at Colliers, says the sentiment in the sector is positive despite Auckland’s extended lockdown.
“Since the Alert Level 4 restrictions were enforced in mid-August, we have transacted nearly 40 property sales across Auckland with a combined value of more than $250 million,” Fraser says.
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“Some of these transactions were conducted off-market, while others were able to take place because the campaign was launched far enough in advance of the lockdown to enable buyers to inspect the properties before the restrictions were in place.
“In 2021 people have greater access to technology with more tools to be able to work remotely, which contributes to improved productivity across the industry.
“While we experienced a degree of scepticism about the immediate future of commercial property during last year’s national lockdown, the market rebounded so strongly that investors are more relaxed and optimistic in this lockdown, meaning the market has remained strong.”
Some of the notable recent transactions came from a variety of different commercial offerings, including eight Gull service stations spread across the North Island that sold for a combined sale price of just under $32 million, representing a blended yield of 4.4 per cent.
There was also the market-leading $30.05 million sale of the Synlait Milk facility in Richard Pearce Drive in Mangere brokered by the team at Colliers Highbrook.
Fraser says the demand for land that is suitable for terrace housing or townhouses is insatiable among developers and investors.
“This was exemplified by the recent sale of a property in Panmure that is zoned Residential – Terrace Housing and Apartment Buildings Zone under the Auckland Unitary Plan, which is a high-intensity zone enabling a greater intensity of development than previously provided for.
“The property was due to be auctioned but a number of pre-auction offers were received, and the property sold nine days before auction day at $2700 per square metre to a developer.”
Given the recent Alert Level 4 restrictions were only in place for a short period of time outside of Auckland compared to last year’s lengthy national lockdown it will also help the market remain in a good position.
As we move towards the final quarter of the year, Fraser says there is no sign of the market slowing down.
“October to December is usually the busiest time in the market as everyone focuses on the lead up to Christmas but that will be pushed into overdrive this year due to the backlog caused by Covid-19,” Fraser says.
“The eventual lowering of Alert Levels will only inject more confidence back into a dynamic market and we look forward to a busy run until the end of the year. We have many campaigns ready to launch when Auckland moves to Alert Level 3 where inspections are possible.”
Colliers’ recent research suggests that given increases in interest rates are likely to be incrementally adjusted over the short term and that the moves are from record low rates, the impact upon market activity should be limited in the short-term providing a clear signal for an active market ahead.
- Article supplied by Colliers
