Good mainstream commercial properties achieving net yields around 5% but higher yields possible if you look further afield

Good mainstream commercial properties achieving net yields around 5% but higher yields possible if you look further afield
This two level charcater building on Dominion Rd in Auckland sold for $4 million, giving a net yield of 5.01%.

Five per cent appears to be the net yield figure commercial property investors seem to be aiming for with mainstream, small to medium sized commercial properties in Auckland.

At Bayleys' latest commercial property auction in Auckland, 10 properties were offered with bidding received on seven of them while three were passed in with no bids.

Of the seven that received bids, four were sold under the hammer.

Of the four that were sold, two were vacant - a modern 45 square metre shop in the Eden Quarter complex on Dominion Road, which sold for $470,000, and a 5002 square metre residential development site at Rosehill in Papakura, which went for $2,800,000.

The two tenanted properties that sold were a childcare centre in Beachlands which went for $2,660,000, giving a net yield of 4.96% and a large, two level character building with multiple tenants in the main Asian dining strip of Balmoral, which went for $4.0 million, giving a net yield of 5.01%.

Also reported by Bayleys recently was a 365 square metre industrial building with a large yard and car park in Manurewa, which went for $826,000 giving a net yield of 5.12% and a medical centre in Woburn, Lower Hutt that went for $675,000 giving a net yield of 5.47%.

However some properties are also selling at much higher yields, with a 602 square metre, retail premises with multiple tenants in Silverdale returning a yield of  6.17%, an ANZ Bank premises in Waiuku achieved 6.98%, a 330 square metre retail premises with four tenants on a 1006 square metre site at Stokes Valley in Wellington achieved 6.98%, while a substantial, two level building on a corner site in Petone, with seven retail tenants on the ground floor and 10 flats on the first floor, sold for $2,500,000, giving a net yield of 10.5%.

Further details and photographs of the above properties and others that have sold, are available on our searchable Commercial Property Sales page.

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4 Comments

Mum and Dad investors will increasingly be making the move to commercial so expect to see further drops in yields.

And they'll panic the first time they get a vacancy that lasts longer than two months...

Not sure they'll get the funding. Banks being pretty cautious with C& I just now.

So 40% sales rate. Not that great. Would have expected higher.

The Dominion Road one looks like a seismic-risky property too.