Shops sell for low yields at auctions but multi-tenanted buildings not favoured

Stand-alone strata-title shops were more popular than properties with several tenants at recent Bayleys auctions in Auckland.

The properties that sold continued to test new low yields, reflecting the strength of bidding.

But with the exception of two popular Wairau Rd hub shops, three multi-tenanted properties were passed in.

A 774m² property on 2030m² of land in Archers Rd contains a Japanese food outlet, Jetts Fitness branded gymnasium, a bridal wear shop and pet food retailer. The property was passed in after an opening vendor bid of $3 million.

Nearby, a 1680m² building with several independent tenants returning an annual income of $187,775 was passed in after an opening vendor bid of $2.250 million. The front portion of the building is occupied by bedroom furnishing retailer Bedstop, with six smaller retail and office spaces of between 22m² to 103m² with several service and consultancy businesses.

A similar property in the heart of the South Auckland rural township of Tuakau mirrored those results. The 1615m² building houses six independent tenancies generating a total of $89,980 of rental income. It was passed in at $917,500.

However, North Shore sales included the two units at the Wairau Junction retail hub. A 98m² unit with fast food outlets Nando’s and Pita Pit as tenants and returning an annual income of $73,000 sold for $1.05 million at a yield of 6.95%. Nearby in the same hub, the 330m² Produce Planet food and grocery mini-market building returning $85,000 in annual rent sold for $1.26 million at a yield of 6.74%.

The auction was characterised by foodservice, convenience, and grocery outlets.

Ten of the first 11 properties sold at auction.

The first offering, six shops on the corner of Vincent St, Howick, a 571m² building on 660m² of land returning a combined annual income of $121,749, sold for $2.4 million at a yield of 5.06%. Tenants include a dairy and Lotto shop, florist, café, butchery, pharmacy, hair salon and doctor’s studio. 

A Manukau Rd retail unit in Epsom with a Bottle O liquor store as the sole tenant returning annual income of $55,825 was sold for $768,000 on a yield of 7.26%.

A Mad Butcher outlet in Triangle Rd, Massey, returning $96,080 a year was passed in at a top bid of $1.050 million but sold later through post-auction negotiations. The 527m² building and four car parks has a short term to run on the lease until 2016.

The shops in better locations with nationally branded tenants sold quickest for strongest prices. Conversely, secondary grade stock in less desirable places with shorter lease terms received fewer, if any, bids, as did larger retail units, according to Bayleys’ commercial and industrial director John Church.

Bayleys brokers also identified the location and building age as reasons a Mad Butcher outlet in Triangle Rd, Massey, was passed in at $1.050 million.

Meanwhile, land and buildings housing an ANZ branch in Great South Rd, Papatoetoe, and returning $140,483 a year, sold for $2.255 million for a yield of 6.22%. ANZ has signed a new six-year lease, with two further three-year rights-of-renewal. A 134m² home/work vacant rustic barn style property clad in corrugated iron with commercial use rights in Jervois Rd, Ponsonby sold for $830,000.

A vacant 645m² commercial premises with some high-stud warehousing space in Archers Rd, Glenfield, sold for $1.130 million.  Two industrial properties included a 1913m² group of buildings on 1606m² in Dominion Rd, Mount Roskill, which sold for $2.47 million at a yield of 4.53%. One of the tenants is a sheet metal firm with a light industry manufacturing operation. 

In South Auckland, land and buildings housing two automotive panel beating and paint businesses in Great South Rd, Manurewa, sold for $871,000 for a yield of 6.93%. The tenancies generate rental return of $60,375 a year.