Cost efficiencies are luring more North Island businesses south as they split their distribution centres between Christchurch and Auckland.
Sam Staite, Director of Industrial at Colliers Christchurch, says the affordability of the Canterbury market is a major attraction coupled with the ease of business relationships.
“Businesses are very conscious of keeping their costs under control so they can continue to offer their products at competitive pricing.
"With property occupancy being a significant portion of a firm’s overheads, and given the current economic challenges, it makes sense that more and more are looking south for ways to find efficiencies,” Staite says.
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“With cheaper warehouse rental costs plus efficiencies in transport and labour, it has certainly been a growing trend over the past five years.
"In some instances, our warehousing in Christchurch can be almost half the rental charged in Auckland for a similar product, so it’s no wonder enquiry is building.”
For instance, Staite cites a 77-year-old North Island family business he recently worked with to identify the right development opportunity in Christchurch for them to build a new distribution centre.
Steelfort, a leading supplier of outdoor power equipment, is the contract distributor of high-end kitchen and laundry appliance brand Miele.
It also has a long-established stainless steel fabrication business and manufactures commercial finned tube heat exchangers for the likes of the kiwifruit and apple industries.
It already owns a state-of-the-art purpose-built 2,000sq m distribution centre at 880 Great South Road in Auckland, and an 11,000sq m manufacturing facility in Palmerston North but sees immense opportunities in Christchurch.
Earmarked for completion in October, its cutting-edge 2,000sq m design build is located at 21 William Lewis Drive in Sockburn and is being developed by Calder Stewart.
Staite says John McOviney, Steelfort’s Managing Director, contacted Colliers because of its reach and market knowledge.
“He lives in Mount Maunganui, so we wanted to spend whatever time necessary to ensure he fully understood the options here and took him to meet a variety of developers. It meant that, with our advisory support, he could make an informed decision.”
McOviney says it was a real eye opener looking at the various options with Colliers.
“South Islanders are people of integrity. They say what they mean and mean what they say. It’s refreshing.”
He says the company has been looking at the Christchurch market for some time.
“We were very keen to have a strong presence in the South Island and see big things happening here over the next 10 years.
"It’s an ideal location for distribution. The South Island, and particularly Christchurch, has always been very good for Steelfort and particularly for our Lawnmaster branded products.
“Sam introduced us to the right people, showed us the right site, and had extensive market knowledge.”
The new 3,100sq m building in William Lewis Drive includes 600sq m of showroom and sits on 5,998sq m of land.
Steelfort’s origins date back to 1946 when McOviney’s father bought Fuller Engineering, a small manufacturing operation in Palmerston North. In 1967, it introduced its inaugural Lawnmaster rotary mower to the Kiwi market.
Although deeply involved in the business for many years, McOviney took over the reins in 1983 after his father’s death and set about diversifying Steelfort’s offering, focusing on expanding its manufacturing and seeking popular international brands to complement its own products.
This saw the introduction of names such as Cub Cadet and Rover ride-on mowers, Miele whiteware products, and the world-renowned commercial ice makers from Japan, Hoshizaki.
McOviney attributes Steelfort’s longevity to its New Zealand family-owned origins.
“The direction of the company and all decisions are made here in New Zealand. It was hard work during Covid, but the market is expanding again and we’re continuing to look for new opportunities here and internationally.”
Ben Murphy, General Manager of Property at Calder Stewart, says there are four key drivers fuelling interest in new industrial development projects in Christchurch.
“These include insulating against the fragile supply chain from the North Island, given problems with the Cook Strait ferry and rail. Affordability compared to North Island markets (rent and land values).
"Businesses responding to customer demand in the South Island and the efficiency of consolidating several facilities into one purpose-built facility,” Murphy says.
“The efficiencies provided by a purpose-built facility can significantly accelerate business productivity and provides effective cost control, something that our customers put a high value on, particularly in a tighter market.
“The design build process is all about partnerships. Calder Stewart have enjoyed partnering with Steelfort on this project and look forward to seeing the positive impact the new facility will have on this unique family business.”
Steelfort’s new neighbours in Christchurch are another North Island-based company that was already renting in Christchurch but was keen to become an owner-occupier.
- Supplied by Colliers
