Revitalised North Shore finds its ‘sweet spot’

A dynamic North Shore commercial property market is bucking Covid and rising interest rates with a rejuvenated Takapuna leading the way, a leading commercial real estate specialist says.

Resilient business demand and the North Shore’s growing pulling power have created a pipeline of occupiers chasing commercial space north of Auckland’s Harbour Bridge, according to Bayleys North Shore General Manager Jayson Hayde.

This is generating intense buyer and tenant competition and driving new development, he says.

“The North Shore is increasingly seen as a good-sized city in its own right, with opportunities for business, growth and a great lifestyle. It’s a place where more and more businesses want to be.

“At its heart, Takapuna is undergoing a revival. Long-term council programmes to revitalise its metropolitan centre, combined with an upsurge in commercial interest, are creating a ‘sweet spot’ of new activity and investment,” Hayde says.

Bayleys’ latest North Shore Commercial Market Update points to a scarcity of vacant commercial premises and keen demand for available stock.

“Occupiers are responding by making earlier plans for their premises. Successful businesses are front-footing decisions and making early commitments for extra space to support their growth.

“Amid growing competition, available commercial properties often attract multiple offers from occupiers. This is putting upward pressure on rents, and we expect to see further rises in the coming year,” says Hayde.

According to Bayleys research, benchmark rents for scarce modern office premises on the Shore sit at $390-$430 per square metre, with benchmark yields between 5 and 6 percent.

While in reasonable supply, high street retail space is attracting benchmark rents in the $540 to $700 range, with yields hovering at 4.7 to 5.1 percent.

“Despite climbing interest rates, there’s no shortage of cashed-up buyers in the market, including former residential property investors now turning their attention to commercial assets.

“Fundamentals are front-and-centre. Properties with good quality buildings, scale and strong lease covenants are in particularly hot demand,” says Hayde.

Underlining the area’s expanding appeal, a two-level standalone office building at 9 Huron Street, in central Takapuna, has just been snapped up in a $10.5 million deal by ASX-listed flexi workspace leader WOTSO Property.

Known as Karaka House, the site features large open-plan floor plates, a good mix of offices and meeting rooms and generous basement car parking. Surrounded by shops, restaurants, childcare centres and gyms, it was seen as ideal for the Australian giant’s first New Zealand coworking hub, which it aims to open early next year.

The property was sold through Bayleys' Peta Laery, Michael Nees and Dean Gilbert-Smith.

Developers are closely eyeing the hunger for new space. As the North Shore’s commercial, retail and social epicentre, Takapuna is attracting much of the resulting investment and activity.

Central Takapuna is one of just 10 metropolitan centres zoned for some of the most intensive development under the Auckland Unitary Plan.

“Takapuna has been a big winner from the Unitary Plan’s overhaul of new intensive zoning, and this has given the suburb a framework to reach its full potential. Activity is further stimulated by ongoing council projects to add vibrancy to the town centre,” says Hayde.

A raft of new commercial developments are taking shape in and around central Takapuna, including a number of high-end apartment projects.

Sitting prominently in the town centre, on the corner of The Promenade and Hurstmere Road, a tired commercial property fronting the Bruce Mason Centre has been transformed into a vibrant hospitality destination and luxury offices by owners Knight Crawford.

Supported by Stephen Scott of Bayleys, Knight Crawford bought body corporate units of the building, previously part-owned by an Auckland Council organisation. It had it subdivided from the theatre then leased out premises following a total refurbishment.

The project has attracted new tenants such as bakery and dessert chain Little & Friday and bed linen and sleepwear retailer Wallace Cotton. Repositioned to the ground floor is 20 year-plus tenant the Japanese teppanyaki steakhouse Daikoku, alongside existing cafe Botannix. The upper two floors were converted to offices, now fully leased, and a corner deck area will house a new concept espresso bar.

On a pivotal site a few hundred metres south, Knight Crawford is creating another hub of high-end food and beverage along with retail and basement parking. Located on a triple-fronted beachfront corner with outstanding views, 105-111 Hurstmere Road was described by Peta Laery, Michael Nees and Ryan Johnson of Bayleys as a once-in-a-generation opportunity when it went on the market earlier this year.

The three-level former office and retail building is now being strengthened, refurbished and built out to maximise the existing building envelope, enclosing a non-lettable vehicle ramp and walkways, with new lifts and stairs to create better access from Takapuna Beach.

Designed to complement and stimulate private investment, the council’s Takapuna Centre Plan seeks to further invigorate the metropolitan centre. This includes public space and street design improvements plus a major redevelopment of the Anzac Street Carpark with nine levels of retail, commercial and residential accommodation, along with a new town square. The council’s development arm, Eke Panuku, is working on this project with leading developer Willis Bond, renowned for its high-profile work in Auckland’s Wynyard Quarter.

Just outside the metropolitan centre, development possibilities were also to the fore in the recent sale by Hayde and Bayleys colleague Tonia Robertson of two adjacent freehold sites at a high-profile location on Lake Road.

One, an approximately 550-square metre parcel of land used for car parking at 402 Lake Road, has resource consent and plans for a multistorey complex with 12 apartments, commercial space and car parks. It was sold with holdover income of approximately $36,000 per annum from Wilson Parking.

The two-level corner property beside it at 404-408 Lake Road generates annual net rent of $124,000 plus outgoings and GST from four retail and office tenancies with multiple car parks.

These two sites with a combined area of some 1,100 square metres sold together in April for $6.48 million.

The sites are seen as ripe for redevelopment thanks to their Business – Mixed Use zoning. This provides generous scope for new builds, from single-level to intensive multilevel residential and commercial projects.

- Article supplied by Bayleys