As New Zealand’s fifth largest and fastest-growing city, Tauranga’s commercial property market is primed for a significant shake-up on the back of 20 committed catalyst construction projects representing investment of around $1.5 billion over the next eight years.
In the latest edition of Bayleys’ Total Property, the firm’s head of insights, data and consulting, Chris Farhi said the developments planned across Tauranga’s CBD show it will be one of the most transformed city centres in New Zealand over the coming decade.
The Western Bay of Plenty’s economic development agency Priority One recently released the Tauranga CBD Blueprint which outlines the planned projects, with the knowledge base created in partnership with property developers, landowners, investors, and the Tauranga City Council (TCC).
Farhi said Tauranga’s CBD evolution can launch from a position of strength given its existing low-rise skyscape.
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“Look at any of the world’s high-profile central business districts and they all display high-rise office towers and multi-level commercial development which optimises constrained inner-city land.
“In Tauranga, the CBD covers a reasonably large area but there’s scope for increased intensification given the current largely low-rise commercial componentry – something Auckland and Wellington cannot offer developers.
“While nothing says its CBD must go sky-high, there is significant opportunity to leverage the commercial potential of Tauranga city’s core.”
Sited on Te Papa peninsula, there are compelling water views to be unlocked from taller buildings in Tauranga’s CBD which will add value to both the corporate office and apartment markets, and the existing CBD framework features a number of larger sites with development potential for bigger footprints.
Bayleys Tauranga commercial and industrial manager Mark Walton said Priority One’s Tauranga CBD Blueprint clearly illustrates the city’s development big picture from now to 2030.
“Since the launch of the Blueprint, we’ve seen an uptick in enquiry from developers and investors who want some exposure to the CBD.
“This is particularly around potential development sites with some scale – whether that be older buildings for demolition and rebuild, or repurposing existing buildings.”
“The raft of investment in new projects as outlined in the Blueprint has also sparked existing landlords to reassess their property assets, with portfolio landlords who own multiple properties particularly looking at how their assets fit in with the city’s broader redevelopment plans.”
Walton said he’d expect to see some consolidation of commercial property portfolios and potentially, a wave of property coming to the market from those landlords who feel they’re not in a position to be part of the city’s regeneration.
“It’s early days, but I sense renewed optimism for the city centre and for what the CBD could look and feel like.
“Sophisticated new office developments will inevitably have a knock-on effect for the office leasing market with the step-change in quality flowing on to increased rental rates.
“Additionally, as other existing office properties are redeveloped or repurposed, there will be movement across tenancies and within lease structures.”
Numerous private developments are occurring in the CBD currently, with the flagship mixed-use project Thirty Eight Elizabeth generating real hype in the market, according to Walton.
“The 8,000sqm retail component of this $200 million mixed-use development which includes high-end living and 340 car parks, is anchored by retail heavyweight Farmers and is expected to kickstart retail development in the wider CBD,” said Walton.
“Now that people can see the quality of this build undertaken by Elizabeth Properties, part of the James Pascoe Group of companies, and the commitment from founding retail and hospitality tenants, it is expected other investors and developers will be spurred on to improve retail offerings.”
Meanwhile, Bayleys Bay of Plenty general manager Jon O’Connor said the Blueprint’s pipeline of commercial development set to rejuvenate the CBD will create opportunity for more inner-city living options.
“Thirty Eight Elizabeth reflects the developer’s vision and commitment to providing central Tauranga with a new style of living,” he said.
“With 97 high-end apartments across 10 storeys and two towers, and 23 luxury townhouses, this is city living usually found in the larger metropolitan centres and when they do hit the market, I expect a real ripple in the market.”
O’Connor said development of the scale and quality of Thirty Eight Elizabeth, and plan changes by council and central government, will provide confidence to other developers and investors resulting in more apartment/townhouse options in the heart of the CBD and on its fringe.
“Getting more people into the heart of the city to enjoy the planned amenities is one of the goals and I feel the market will respond,” he said.
- Article supplied by Bayleys
