Cutlers Commercial Update
Commercial update from Cutlers Commercial Welcome to our final newsletter for 2021. We trust that you have had a good year and looking forward to a prosperous year in 2022.
Please click on the link Sales 2021 to see the recorded sales, (52) YTD. These are supposed bona-fide sales in the Dunedin area from January 2021. The sales volume is on a par with last year. We have identified 5 of these sales being property on leasehold land. We have analysed the sales into 20 sales being investment property and the balance being either development sites or property purchased by owner occupiers.
Yields for the investment property range from 5% for freehold tenure to 12.5% for leasehold tenure. Investment property is still very tightly held with very few properties coming on to the market. Any investment property that become available and is priced under $2 million sell within weeks of being offered for sale, that is not to say property over this price are difficult to sell is not the case, we have many investment buyers on our books who have the ability to purchase such property, but that pool of buyers is smaller than the $1 and $2 million buyers.
Vacant industrial property for development in Dunedin is almost non-existent as is evidenced with only one sale of a large site in Green Island. There are sites on the Taieri coming up for sale next year and I am sure these will prove popular. There are currently only 11 commercial properties listed for sale on Prime Commercial For Sale
Our pick for the commercial selling market in 2022 is pretty much the same as 2021. Listings will be hard to secure, Yields will remain low so long as bank deposit rates remain in the 1% to 2% range and investors can secure a 3% to 5% margin over and above what the banks are offering, of course this is all dependent on the property being offered for sale. The L.A.T.E.S score, that is, Location, Age of Building. Term of Lease, Earthquake Integrity, and the Strength of Tenant. All the above will have an effect on the final sale price.
Our office has been particularly busy this year leasing a variety of property, with some notable leases being transacted for property that has been sitting vacant for some time.
Vacant industrial property is almost non-existent, especially the smaller spaces of 200m2 to 400m2. In total I calculate there is about 4500m2 of vacant space available and most of this is 500m2 plus. Rents have remained firm for this space at $90m2 to $120m2 for A grade industrial premises plus outgoings. B grade premises are attracting rents of $65m2 to $85m2 plus OPEX.
Retail space remains at about 10% vacant. Click on link to view George St vacancies Link Per m2 rates vary considerably, ranging from $500 per m2 upwards on George St for prime property. This is of course dependent on location.
Office rentals for A Grade start at around $260 per m2 and range through to $340 per m2, and these are in short supply. We have very little B Grade offices available, and don’t have a definitive figure for these and C Grade there are plenty available, but not a huge demand, other than individuals wanting single offices.
Cutlers Commercial Team wish you a very Merry Christmas and Happy New Year!