Like most real estate agents I glance at the commercial pages of the DomPost every week and recently noticed an unusual trend, namely that there are a number of good buildings on the market for sale. For the last few years the pages have been filled with mortgagee sales and distressed stock. By distressed I mean buildings suffering from a loss of tenants due to a lack of maintenance or poor seismic rating and an owner offer suffering from liquidity problems. Now however we have a number of larger sales with buildings like Grant Thornton off Featherston St and more to come as the Precinct portfolio is being marketed currently. The buyers are usually names we know well but occasionally a new face like a certain ‘overseas buyer’ who happens to currently live in Whitby.

For real estate agents they generally have to make minor adjustments to their databases to note who manages what but for tenants of these buildings, they can enter ‘A whole new world’ to quote Paul Hastings, the godfather of commercial real estate agents in Wellington. Paul is a tenant in such a building, having been recently sold to a new owner and seeing the effects of a new focus and new capital expenditure. When a commercial building changes hands office and retail tenants can have significant change forced upon them. A new owner may have a completely different agenda and a new and large mortgage to pay. A new owner will almost certainly have their own service providers and so those maintaining the lifts, air-conditioning particularly may get replaced with new service  people who will  take their time to learn the eccentricities of the equipment. In addition the occupants will have to get to know and work with new building managers who will operate with different accounting systems.

Tenants often find out that any goodwill they may have amassed over time with the previous owner has disappeared as new owners are often keen to maximise building value at rent review time. The upside is that new owners can often bring new life and capital to tired common areas and facilities, foyers and facades. Tenants might want to bear this issue in mind when they choose their commercial space, landlords know that tenants come and go and the reverse can be true too!

Lastly I have just become aware that these pages have been spotted by someone in the US, this is the 85th most popular real estate blog in the english speaking world apparently, I don’t know if I should be insulted or congratulated!