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Two-tiered market creates demand for established industrial assets

A fully-occupied industrial property in the high-growth Otahuhu industrial precinct provides purchasers with a split-risk investment opportunity, amid supply scarcity and emerging two-tier market fundamentals, Bayleys salespeople say.

The standalone warehouse on 1,095sq m (more or less) of freehold land at 35 Atkinson Avenue occupies a commanding position with broad street frontage accessible to Auckland’s southern transportation hub, encompassing road, rail and a modern bus interchange.

Bayleys Auckland City & Fringe Associate Director James Were says the flight to quality has created a two-tier industrial market, whereby investors at lower price points are looking to ageing assets for a source of value, given limited availability and upward pressure on rental values.

“As we have observed in the office sector scarcity of supply, and rising costs constraining the development pipeline continue to attract investors to industrial assets, particularly those in high-growth and accessible locations with strong logistic fundamentals.

“Emphasis on sustainable building principals and the flight to quality is seeing a two-tiered market emerge, with a good chunk of investors and owner-occupiers turning to established properties which offer the opportunity to add value.

“At the same time, a nationwide lack of stock and low vacancy rates is contributing to rental inflation for existing supply, which is expected to creep upward as fixed or ‘to market’ rent reviews take effect.”

Were is marketing the property for sale with colleague Phil Haydock via tender process closing at 4:00 pm on Tuesday, 18th July 2023 (unless sold prior).

Built circa the 1970s with a 70 percent seismic assessment, the refurbished property provides four separate tenancies, returning a combined net annual income of $126,497 plus GST and outgoings.

Totalling 518sq m (more or less) plus 10 on-site car parks, the premises features 153sq m (more or less) of prominent retail with frontage to Atkinson Avenue and three warehouse tenancies positioned at the rear.

The warehouses feature roller door access and self-contained amenities.

An established laundromat with 44 machines occupies the retail tenancy and the 129sq m (more or less) warehouse behind, with separate leases of 12 and 10 years to January 2040. Each lease features one ten year right of renewal and fixed annual rent reviews.

Artificial grass specialist Team Turf and car detailing business Elite Auto occupy the rear warehouses, which span 120sq m (more or less), each with leases of varying terms and fixed annual rent reviews.

Bayleys Auckland City & Fringe Associate Director Phil Haydock says that while the versatile standalone building presents strong investment fundamentals, its flat, rectangular site in Business – Mixed Use zone sweetens the value proposition for purchasers with a view to the future.

“High-density zoning provides residential and commercial development potential up to a height of 21 m, offering the benefit of diversification and the opportunity to add value down the track when there’s greater certainty in the development sector.”

Haydock says the property’s location in the heart of Otahuhu’s industrial precinct provides convenient access to nearby commercial areas East Tamaki, Manukau City, Mount Wellington and the central city.

“Otahuhu continues to thrive as a culturally diverse and fast-developing residential, commercial and industrial hub along Auckland’s southern corridor. It stands to benefit from substantial investment into critical public transport infrastructure and growing commercial opportunities in nearby Manukau, Penrose and Sylvia Park.

“The property is primed to benefit from this growth, at the same time providing strong development fundamentals and the opportunity to leverage demand for industrial accommodation via a split-risk income model,” he says.

Click here for more information on the listing.

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