The stars are aligning for Warkworths future growth.
A combination of major road infrastructure improvements from Auckland coupled with Warkworth’s designation as a satellite centre in the Unitary Plan is expected to act as a strong catalyst for further population and business growth over the next 10-20 years. This will cement the towns position as the primary commercial hub for Northern Rodney.
In recognition of this anticipated growth Bayleys Research has launched its maiden commercial and industrial market vacancy survey for Warkworth.
Vacancies by Sector
A total of 110,100m2 of commercial and industrial space was surveyed within Warkworth split between retail (37,100m2), industrial (64,400m2) and office (9,600m2). The results showed that vacancies were very tight in the industrial (2.3%) and office (5.6%) sectors. Retail had the highest vacancy rate of 7.1%, the bulk of which was located in the new and refurbished BNZ complex on Neville Street as well as The Grange retail hub just south of the centre.
Vacancies by Location
Analysing vacancies by location, shows Warkworth Central had an overall commercial and industrial vacancy rate of just 5.1% and Woodcocks an even lower 2.4%. The only double-digit vacancy (18.8%) was recorded at The Grange reflecting vacancies in several retail units.
Key Space Occupiers
A breakdown of key space occupiers reveals that within the retail sector Food and Beverage (covering cafes, bars, restaurants and supermarkets) dominated with a third of all space. The next largest occupier was Professional Services (including real estate agents, banks, travel agents) at 15% followed by clothing, beauty and medical/pharmacy all at around 6-7% each. The past 2 years has seen a growing number of national brands move into Warkworth including McDonalds, BP, Coffee Club, Pizza Hut, Dominos, St Pierre’s Sushi, a trend which is expected to continue going forward.
Within the office sector Medical related operators dominated with around 29% of total office space followed by Lawyers/Accountants with 15%. Insurance brokers occupied 10%, then Engineering and Property (Valuers and Quantity Surveyors) with 6-7% each. Much of the existing office space in town is confined to first floor offerings, generally above ground floor retail. There is currently no purpose-built office space in Warkworth.
A wide range of businesses occupied industrial space. The largest, by square metres, being Manufacturing businesses with 26% of total industrial space followed by Home Services (eg. Bathroom/Plumbing) at 16% and auto related businesses with 11%.
Drivers of Future Growth
New motorway linking Auckland to Warkworth – By late 2021 a new 18.5km four lane motorway will extend the existing northern motorway from Auckland (SH1) further north of the Johnstones Hill tunnels to Warkworth. This will be a game-changer for Warkworth and the surrounding catchment (eg. Matakana, Omaha, Leigh, Snells Beach, Wellsford), improving connectivity and significantly reducing travel times to and from Auckland. Planned local link roads (Matakana and Western Collector) would further aid traffic flows in and around the catchment area.
Warkworth’s population currently totals around 4,500 and is expected to grow 6-fold to close to 30,000 over the next 30 years. The primary catalyst being the town’s designation as a satellite centre within the Unitary Plan and the rezoning of approximately 1,000ha’s of land to the north and south of the town as Future Urban. Numbers generated by Auckland Council in their “Warkworth Structure Plan – Background Information” Report expect the current 2,100 households in Warkworth to increase to between 9,700 and 11,600 households by 2043. The broader catchment, which currently contains around 12,000 households is expected to grow to between 21,600 to 26,800 households over the same timeframe. At an average household occupation of 2.7 people per house, the expected population of Rodney North could be in excess of 70,000 people. We expect sustained population growth will drive business and employment expansion which, in turn, will drive continued demand for commercial and industrial space.
A recent “Draft Warkworth Business Land Assessment” study prepared by m.e consulting for Auckland Council (March 2018) points to a further 237,000m2 of commercial and industrial space required to support growth in the broader catchment by 2043. This would involve between 30 to 39ha of business land. The same study proposed a time-frame for the release of Future Urban land out to 2042 with much of the activity initially occurring to the North/North West (2018-2027). This would be followed by activity to the South (2028-2032) and finally to the North East (2033+).
With a 6-fold increase in population expected over the next 30 years provisioning for a whole host of support services and infrastructure will be required including community/government services and additional schooling capacity. Currently, four schools with a total student roll of circa 2,500 service the broader Warkworth catchment. Planning needs to occur quickly to ensure critical services are in place as and when needed.
Current Supply Pipeline
The largest commercial and industrial project recently completed in Warkworth has been the staged development of The Grange – a 4,700m2 purpose-built retail hub located on State Highway 1on the towns southern outskirts.
Other major projects currently underway include the 65 units at The Oaks on Neville retirement village behind the historic Warkworth Hotel in Warkworth’s main shopping street. The development will include four ground floor retail units accessed from Queen Street and is expected to be completed by July of this year. There are also proposals for a number of other retirement complexes in and around Warkworth including two to three apartment buildings on the former Warkworth Price Cutter site on Neville Street as an extension of The Oaks, a new retirement village on Falls Road west of Warkworth and Summerset’s ongoing expansion of its existing village on Woodcocks Road.
Other consented retail projects include Kowhai Falls, a 15,000m2 large format retail centre on vacant land adjacent to Mitre10 Mega on Woodcocks Road. We also understand there are proposals for a new Pak’nSave supermarket and potentially some complementary retail on the corner of Hudson Road and State Highway 1.
Historically both the annual number and value of commercial and industrial property sales in Warkworth have been low – averaging around 10 sales a year with a total annual value of $18 million since 2010. Limited activity reflects the small size of the current market and the fact that much of the existing commercial and industrial property in Warkworth (and greenfield sites zoned for Future Urban) are owned by local investors and family trusts who seldom transact.
Going forward we would expect investment activity to increase as population growth drives more new development and attracts an increasing number of outside investors.
Larger sales over the past 12-18 months have included the Warehouse Stationery building at 2 Queen Street for $3.65 million in March 2017 to Darc Investments. The Coastline Medical Centre at 4 Warkworth Street sold recently for an undisclosed sum. Several retail units in The Grange have also been taken to auction over the past 6 to 12 months and have achieved prices between $475,000 to $3,350,000 on yields ranging from the low 5’s to mid 6’s. A very recent sale of 3-5 Queen Street for $845,000 achieved a yield of 4.7%.
Rents & Yields
Both retail and industrial rents are expected to show some further marginal upside over the next 12 months on the back of increasing occupier demand. Industrial property, in particular, is experiencing growing demand but little if any supply to match.
Most commercial and industrial sales are sub $2million and typically attract competitive bidding amongst investors. Yields can range anywhere between 4.75% for retail properties to mid 5% for industrial properties. Sales greater than $5 million usually transact on higher yields in the range of 7 – 8%.