Investors are clamouring for industrial property in Christchurch on the back of continuing high prices.
In just two weeks during September, Colliers' Christchurch office negotiated more than $100 million of sales, while another $50 million of industrial property is coming to the market this month.
In the quarterly Colliers Christchurch Industrial Report, director of industrial Sam Staite says demand within the sector is across the board.
“The market continues to run hot and shows no sign of slowing. All areas are performing strongly, including leasing, investment sales, vacant sales, new build sales, and vacant land transactions. Off-market transactions are making up the bulk of the larger transactions.”
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Staite says lease terms are getting longer and rent rates are finally showing signs of starting to rise after being stagnant for 10 years.
“Yield compression is no longer limited to the prime investment market with the smaller, older assets in city fringe locations such as Sydenham now seeing yields for certain products heading down into the low 5 per cent range,” Staite says.
“Traditionally one of the older industrial suburbs in Christchurch, we’ve seen the increasing gentrification of Sydenham in recent years, and the conversion of smaller light industrial premises into trade-retail, retail and hospitality uses.
"This continuing trend is limiting the availability of stock. As a result, rent rates are climbing, yields are pushing down and vacancy is at an all-time low in the suburb.
“Larger properties are still highly sought-after by private investors and property funds, as evidenced by two substantial recent sales – an off-market industrial sale for circa $35 million in the South Island and a warehouse in western Christchurch with vacant possession for just shy of $12.5 million.”
In the newer industrial area of Wigram, Colliers has negotiated multiple sales of well-leased, modern properties.
Recent Market Snapshot
Investment Sales
Wigram - $3.45m, 4.5% yield
Hornby - $3.50m, 4.5% yield
Vacant Possession Sales
Sockburn – $1.55m, 6.2% yield
Wigram - $3.25m, 5.5% yield
Land Sales
Hornby – circa 1ha, $315sq m
Rolleston – circa 1ha, $250sq m
Leasing
Wigram – 3,300sq m – eight-year lease - $105 per square metre
Islington – 4,500sq m – 10-year lease - $100 per square metre
- Article supplied by Colliers
