In both the short and long term Hamilton and Tauranga will continue to be the major beneficiaries of key road infrastructure projects recently completed and planned. These will reduce valuable travel times and congestion between the centres and Auckland and improve the movement of freighted goods. This, coupled with the expansion of port activities in Tauranga and the expected commencement soon of development activity on the first stage of the landmark inland freight port in Hamilton (Ruakura), should act as major economic drivers going forward.
HamiltonAn increase in new developments throughout Hamilton over the past few months has given the city’s commercial and industrial sectors a boost and along with further refurbishment of older CBD office stock, is leading to increased tenant activity.
Genesis Energy has recently announced plans to consolidate its Hamilton operations in one location with plans for a new office tower at 94 Bryce Street. The site currently houses an old Countdown supermarket on land owned by the Hamilton Council. Construction of the new premises is planned to commence in mid 2016 with completion scheduled for the first half of 2017.
Wallace Corporation is also building new premises for FMG Insurance at 690 Victoria Street which should be completed shortly.
Office refurbishment activity remains popular, with developers such as Matt Stark currently involved in a number of projects the largest being a significant corner redevelopment on Angelsea and Knox Streets.
Recent press reports also suggest that the IRD, with around 500 staff currently located at 1 Bryce Street, is searching for new offices and has yet to announce whether they will recommit to the CBD.
On the retail front Tainui Group Holdings recently placed up to a 50% leasehold interest in The Base (incorporating Te Awa Mall, large format retail plus 7.67ha of additional vacant land) for sale seeking a like-minded joint venture partner. The complex comprises the largest single site shopping centre in New Zealand and occupies 31ha’s including 83,500m2 of net lettable area, over 190 tenancies and more than 3,000 car parks. The move to sell a stake in The Base will release a significant amount of capital for TGH which it has stated it will use to reduce debt and re-invest in a balanced range of investment classes to grow jobs and increase cash returns to further tribal objectives, and extend the land estate for Waikato-Tainui.
Scentre Group, the owner of Westfield Chartwell recently entered into an agreement to sell the property along with Westfield Queensgate in Wellington to the Stride managed Diversified NZ Property Fund Limited for $445m. The acquisition is subject to Overseas Investment Office approval as the primary stakeholders in the Diversified NZ Property Fund are a number of large Australian institutional investors. The transaction is expected to close in the first half of 2016. Westfield Chartwells last publicly recorded value in Scentre Group’s books was NZD$177m (cap rate 8.13%) per the December 2014 annual report.
Hamilton’s other major shopping centre – Centre Place South, owned by Kiwi Property Group, remains on the market for sale.
Plans for a new retail/mixed use development on the Cambridge lakefront have also been released recently by developers Trig Group. Construction of the retail-apartment-accommodation complex on a 3.2ha site at 36 Lake Street is scheduled to commence in early 2016 with completion estimated by mid to late 2017.
Commencement of road works on the 22km Hamilton by-pass section of the Waikato Expressway in 2016 should draw greater attention to Tainui Group Holdings (TGH) huge 480ha mixed use development at Ruakura. TGH lodged resource consent in September 2015 with Hamilton Council for the first stage of the inland port involving 48ha of freight and logistics facilities and is expecting a decision from Council by the end of the year. TGH representatives point to strong levels of market interest from major players about locating facilities at Ruakura, including interest from several potential inland port operators. When completed the Ruakura development will span an area larger than Auckland’s CBD and be NZ’s largest freight logistics hub and integrated commercial and lifestyle development.
Investor demand for well let properties remains strong across all commercial and industrial sectors in Hamilton while stock shortages and increased buyer interest from Auckland is keeping yields firm.
TaurangaBooming kiwifruit exports and an expansion in port activities is underpinning demand for industrial property in Tauranga. Industrial building consents in the broader Bay of Plenty region have doubled over the past 12 months to September 2015 with much of the activity concentrated around storage facilities. Demand is being driven in large part by owner occupiers.
The recent completion of the Tauranga Eastern Link (TEL) road has boosted demand for space at the nearby industrial estate of Papamoa, where vacancies have fallen sharply. Longer term the TEL should act as a major catalyst in opening up new tracts of land for further development.
In the Tauranga CBD, construction of the new 9,500m2 Trust Tower building should be completed in early 2016. The development is a joint venture between local developer CBC Construction and site owner Zariba Holdings and will house around 450 staff. The Tauranga City Council is also considering options for its own space requirements including refurbishing its existing premises or building new premises. No decision has yet been made.
A prime Tauranga City Council site at 384-410 Maunganui Road including a 2,540m2 building with extensive car parking has been sold to the current tenant Zespri for $10.1m. Zespri relocated its offices from Auckland to the site in 2002 and substantially upgraded and extended the existing building. Following the purchase Zespri plans to build a new head office at the southern end of the site and develop a parkland, to be owned by the council, adjoining its new building.
Farmers Trading Company has purchased the 6,000m2 building it has tenanted for 40 years at 119 Devonport Road for $13.3m. The building is one of the largest in the CBD and was put up for sale by the trustees of the Parnwell Trust Partnership in July 2015.
Investor demand for well let properties remains strong across all property sectors, especially those in the sub $3m range. The real challenge in the current market is a shortage of quality stock to satisfy growing investor demand. Under such conditions yields have shown some further firming, and rental growth for better quality properties is evident.