Spurred by a shortage of stock and more affordable entry-level prices, city fringe industrial suburbs in Christchurch are emerging as a specialised micro-market.
Christian Kellar, Industrial Sales and Leasing Broker at Colliers Christchurch, says the acute shortage of freehold industrial development land, coupled with limited supply of existing space, and rising rentals, are all contributing to the generally buoyant sector.
“Throughout other commercial property markets around New Zealand, we have seen a softening of yields due to rising interest rates. But city fringe industrial in Christchurch is less affected, with sale prices and yields remaining relatively firm.”
He points to several sales, for instance, in the past year, including:
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• 449 Saint Asaph Street, $630,000 with a yield of 5.6 per cent
• 47 Shakespeare Road, $645,000 and a yield of 5.4 per cent on passing rental
• 7/72 Orbell Street, $500,000 and a yield of 4.6 per cent on passing rental
“The complexion of city fringe locations, such as Sydenham, is changing with heavier industrial users moving out and the likes of gyms, hospitality outlets, art galleries, and coffee roasters moving in. This is slowly changing the way the suburb looks and is attracting new investors and developers,” Kellar says.
“Sydenham is emerging as a more mixed-use industrial suburb with a real shift in the demographic of occupiers and tenants. This positive transformation has created a micro-market where demand remains high, and values are still relatively firm.”
Oliver Salt, Industrial Sales and Leasing Broker at Colliers Christchurch, says savvy developers and investors are seeking opportunities in the suburb, attracted by its popularity with smaller commercial owner-occupiers and entry-level investors seeking to capitalise on the area's potential.
For example, a small freehold industrial property in Sydenham’s Carlyle Street sold under the hammer to an owner-operator in active bidding at a recent Colliers auction.
“There were several bidders for this property which means there is a lot of unsatisfied demand looking for a similar property.”
Salt says another disincentive for current traditional industrial occupiers is the increase in rents, which have risen from around $80 per square metre to upwards of $150.
Christchurch’s intensification plan change under the Medium Density Residential Standards legislation, set to come into effect by next April, will further change the face of Sydenham.
The Christchurch City Council has notified Plan Change 14 which will enable increased levels of development – in both density and height limits – across many residential and commercial zones.
The rules change the development that can occur without the need for resource consent, which means there will be no need for consultation.
“This will provide further impetus for changes in the city fringe, which has really emerged as a specialised market,” Salt says.
- Article supplied by Colliers
