Investment in large-scale roading projects linking the Northland region to greater Auckland makes the northern corridor more attractive for large occupiers.
In its recent Commercial Market Update for the Hibiscus Coast and Warkworth for the second half of 2022, Ankur Dakwale, analyst for Bayleys Insights, Data and Consulting, says industrial markets across the country are facing tight leasing conditions, with demand driving growth in emerging markets.
“Strong demand for warehousing to support e-commerce and stockpiling from businesses to mitigate supply chain issues have snowballed industrial rental rates in most locations.
“In addition, roading projects which increase transport efficiency enabling occupiers to look farther afield for suitable locations,” he says.
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In Greater Auckland’s Rodney District, roading projects including Ara Tuhono (the new Puhoi to Warkworth highway), Penlink (State Highway 1 to Whangaparaoa) and the Matakana Link (State Highway 1 to Matakana Road), are having a significant impact on accessibility to the region, with occupiers taking notice.
Ben Clare, director of Bayleys in the North Commercial, says his team concluded several high-value transactions in 2022, with purchasers attracted by return and the availability of assets in the north compared with the broader Auckland market.
Recent transactions include the following:
-A 2,045sqm industrial premises at 56 Forge Road, Silverdale, sold for $6,125,000 at a 5.09% yield.
-A 1,796sqm industrial premises at 62 Forge Road sold for $5,685,000 at a 4.25% yield.
-A neighbourhood retail premises of 412sqm at 38 Matakana Valley Road, Matakana, sold for $4,500,000 at a 2.47% yield.
-A large residential development site totalling 8.32ha at 51 Alnwick Street, Warkworth, sold for $13,000,000.
Clare notes good sales activity is driven by a scarcity of developable land, with businesses planning a strategic response to the growth in e-commerce by moving operations to fringe districts where availability is slightly less constricted.
“While there has been some yield softening across the Hibiscus Coast and Rodney in response to increasing interest rates, evidence has shown that industrial assets in good locations with strong tenant covenants are transacting at yields averaging between 4.5 and 5.5 percent.
“Good quality assets remain resilient due to the weight of capital seeking performing investments. However, sale processes are taking longer due to differences in price expectations between vendors and purchasers.
“Despite this, historically-low vacancy rates across the Auckland region continue to encourage occupiers and investors north, which underpins currently strong levels of demand,” Clare says.
Chris Blair, director of Bayleys in the North Commercial, says master planned communities across the Rodney District drive demand for the commercial and industrial sectors.
He points to projects, including the Village Rise in Matakana, Mangawhai Central in Mangawhai, and Milldale attracting new residents and vibrancy to the region.
“Residential values across the Rodney District have outperformed the Auckland region and the national trend, with larger, master-planned communities supporting local prosperity.
“As these communities come online, operators want to capture skilled staff by securing higher quality offices and attractive working environments for their teams.
“Modern office spaces have low vacancies in most locations as tenants continue to attract workers back to the office after the work-from-home phenomenon.
“Seismic protection is driving relocation in higher-risk locations, whereas older and more dated buildings are less competitive, offering an add-value proposition for skilled investors.
“Research indicates that dated offices have greater availability across the region, netting between $220 and $250/sqm per annum with benchmark yields between 5.9 and 6.3 percent.
“Modern offices return between $280 and $310/sqm net per annum with a benchmark yield of between 5.4 and 5.9 percent, and scarce availability continues to drive tight supply.”
While Rodney’s commercial and industrial market has remained largely resilient, Blair says continued growth in e-commerce will fuel the urban logistics component of the market. In addition, consumers’ delivery expectations will drive demand for local warehouses to meet fulfilment requirements.
“Large-scale investment in state-of-the-art distribution centres is yet to come north, but as growth nodes open and vital roading infrastructure proceeds, we are looking ahead with all signs pointing to positive growth for the region,” he says.
Bayleys’ Commercial Market Update, produced by its Insights, Data and Consulting team, provides data to support themes currently impacting the sector.
- Article supplied by Bayleys
