The National Business Review / August 28, 2015
Investing in
commercial property
Photo: Tinaz Karbhari
Special
Report
23
Sales
The property market is on many investors’ radar. Some dive in successfully, while others flounder about.
Leasing
Business Sales
For both, this is a fickle and difficult sector in which to operate and it’s hard to know who to approach for
advice. This special feature provides the opportunity for industry experts in the property markets to share their knowledge, experience and
insight about the commercial property industry.
Invest in buildings, not leases
Sir Robert Jones
In monetary terms commercial property is the third most
important investment outlet
behind the share and bond
markets.
For funds struggling to
place their cash, ceaselessly
pouring in, commercial
property’s major appeal lies
in its scale, specifically the
ability to unload large lumps
of money on a single building.
Today, office towers
changing hands for $100 million or more are unnoteworthy. By comparison there are
no New Zealand listed companies in which one could
take a $100 million share
position without considerable time-consuming effort,
which would inevitably
necessitate paying a premium and even then, with no
guarantee of success.
Given all of this, the most
surprising thing about commercial property is the total
lack of sophisticated analysis, particularly when compared with the sharemarket.
The largest international
real estate agencies all have
research departments but,
primarily, these are staffed by
valuers. They will accurately
detail salient current data
and even make short-term
two year projections but
that’s about it.
For example, last year I
was called as a Crown witness in a much publicised
contentious case revolving
around the investment value
of a historic city building.
The cross-examination went
like this. “So you’re saying the
valuers have got it wrong?,
the opposing barrister put
to me. I replied, “You might
just as well seek a florist’s
view. Valuers are simply price
historians and, unlike the
sharemarket analysts, are not
trained in investment analysis. Investment analysis is
not about today, or next year,
but about what will happen
in five and 10 years time. On
property valuers’ approach
they’d rate Amazon, [then]
valued at $US150 billion, as
worthless as it’s never made
a profit.”
It gets worse, especially
in New Zealand. Earlier this
year the Dominion Post, now
heavily reliant on its pages
it, teach it, now in his mid70s, ekes out an existence,
according to an interview,
from a broom cupboard
behind some shops, advising
budding residential property
investors. On these non-credentials he was allowed to
vent appalling tripe.
“The majority of the
population don’t understand
how commercial property
works,” he opined, an inane
not leases. Unlike Mr Newland, sophisticated commercial property investors know
the best opportunities come
from buying empty buildings, which is why my company has recently tendered
for three in London’s financial district.
Publishing Newland’s
“wisdom” on commercial
property is akin to seeking
Dotcom’s tuition on pole-
Tenancies are utterly irrelevant if the right
property characteristics exist, as through
thick and thin they automatically follow. Put
simply, invest in buildings, not leases Sir Robert Jones
of commercial advertising,
in a decision of monumental insanity, published the
wisdom of Aucklander Ollie
Newland, on commercial
property. Mr Newland dabbled with Auckland flats and
houses in the 1970s, formed
a commercial property company in the 1980s which,
unsurprisingly, went broke.
Then, acknowledging the
old adage that if you can’t do
Accelerating success.
Reach more people - better results faster.
remark, for why should
they? His subsequent comments showed he’s deep in
the bowels of that ignorant
category, particularly his
ludicrously naive, “Investors
should make sure there’s an
existing good quality lease
in place … everything else
comes second.” That is ignorant poppycock. What comes
first by a country mile is location, followed by building
quality, then a host of other
considerations.
Tenancies are utterly
irrelevant if the right property characteristics exist, as
through thick and thin they
automatically follow. Put
simply, invest in buildings,
vaulting.
Does this matter? Absolutely. I despair at the steady
flow of troubled people,
seeking my advice, following
such ill-thought commercial
property investment rationales.
Invariably they’ve been
lured into a bad deal by a
lease temptation, without
regard to the building’s location and quality drawbacks,
plus the fact that leases ultimately expire. Typical are
syndicates targeting small
investors, which concentrate
solely on the lease, sometimes for bad buildings.
More important was the
Reserve Bank’s excellent
March Bulletin tracing how
worldwide, cyclical economic downturns have inevitably
turned into serious financial crises, solely because of
commercial property collapses and their huge impact
on banks.
I’ve watched this recurring pattern for over half a
century and, while much of
it comes through speculative development hubris, a
significant contribution also
stems from the troubles arising through the purchase of
badly located and designed
buildings, temporarily occupied during the bust’s preceding boom.
Newspapers have an
implicit duty of care which
is why the Dominion Post
was negligent in quoting
this clown. Furthermore, he
subsequently aired the same
nonsense in The Herald.
On a happier albeit
self-interested note, this
extraordinary lack of deep
investment analysis in the
global commercial property sector, means it is easy
to make fortunes. It’s why I
employ academic and not
commercial types in my
top management team as
they’re imbued in thoughtful
research and contemplation.
Our discussions invariably
revolve around five and 10
years out, admittedly not
much value to me at my age
but I enjoy it nonetheless.
Smiths cuts debt with HQ sale
Chris Hutching
colliers.co.nz
Retailer Smiths City is cutting debt with
the $20 million sale and leaseback of its
central Christchurch store in Colombo St.
Smiths City is facing the same challenges as counterparts around the country as
sales in appliance stores ease.
Turnover was down 2% this year compared with 2014, shareholders at the
annual meeting heard this week.
Shoppers are spending less in places
most exposed to the rural sector such as
Oamaru, Greymouth, Gore, and Timaru.
Spending in Westport is also down.
The company has closed seven stores
in the past 18 months under its Powerstore
and LV Martin brands. The most recent
closures were on the Kapiti Coast and in
Nelson and Timaru.
Smiths City survived a seven-year period under receivership in the 1990s but
now faces challenges again from slim margins and changed trading patterns.
The June year-end profit of $2.6 million
compares with $5.6m the previous year.
24
PROPERTY: INVESTING IN COMMERCIAL PROPERTY
August 28, 2015 / The National Business Review
PROPERTY: INVESTING IN COMMERCIAL PROPERTY 25
The National Business Review / August 28, 2015
Sales
Leasing
Business Sales
Sales
Leasing
Business Sales
More action in Hornby by
Fletcher and Goodman
Decade-long makeover
of ‘austere’ city street
Sally Lindsay
Auckland’s Albert St is poised for huge growth in land and
property values as well as rents, as it undergoes a complete
transformation over the next decade.
Land values are already rising. Recent sales have been in
the $10,000-13,000 a square metre range and further increases are expected as the street is
rejuvenated.
Major local and international developers have plans
for projects ranging from
$600 million-plus skyscrapers down to four-level additions to character buildings
and other properties are
rumoured to be on the verge
of sale to mainly foreign buyers.
Albert St is part of what the Auckland Council’s proposal for
Auckland Council calls “the a linear park along Victoria St
engine room” – essentially, to Albert St
the city’s inner CBD. Although
it is an important part of the council’s city masterplan, the
street is often described as austere and disappointing despite
qualities such as its gentle descent to the harbour’s edge.
That is about to change. During the construction of the
$2.4 billion city rail link and new Aotea station, which is
expected to be a tower block of similar size to the Downtown shopping tower redevelopment, the street will be transformed with wider footpaths, more trees, refurbished heritage
buildings and a number of substantial developments. Work is
due to start at the beginning of next year.
The Albert St of today will be barely recognisable within a
decade.
The regeneration of this part of the city has gathered pace
since the council signalled lower Albert Street will be used for
the city rail link and Sky City announced it was building an
international convention centre in exchange for more gaming
machines.
Although it will mean 5-10 years of disruption, owners of
property in Albert St are likely to see values increase as people
clamour to get a piece of the action.
The recent sale of the 1879 Blacketts building on the corner of Queen and Shortland Sts, which houses Florsheim
Shoes, is an indication of the way city commercial prices are
moving.
It has climbed about $4 million in value between two sales
just one year apart. It is rumoured the new owner is planning
retail over two floors. First floor retail is a well-established
overseas trend, but has never really been adopted in New
Zealand, apart from in malls. As lower Queen St runs out of
available retail space, it is expected to become the norm.
Given its existing customer base, first out of the blocks for
office and retail redevelopment is likely to be Precinct Properties. It is spending $550 million on a 180-metre, 36-level skyscraper as part of its revamp of the Downtown Shopping Mall,
which will expand from 13,000sq m to 20,000sq m.
Auckland Council has sold Elizabeth Square on the Queen
St side of the shopping centre to the company for the new
development and, in return, Precinct Properties will time the
building of its new office skyscraper and retail project to coincide with a start on construction of the city rail link tunnel
directly beneath the site.
Further up at 7, 9-11, 13 and 15 Albert St and 9 Wolfe St,
the Food Alley site is rumoured to be for sale. Concept plans
were previously drawn up by renowned British architects Foster + Partners for a new office tower with 50,000sq m of gross
floor area. The site has yet to be signed up but it is understood
there is interest, particularly from Chinese investors and
developers.
On the corner of Albert and Swanson Sts, Conrad Group
has Park Residences, a 29-storey mixed-use retail and residential tower overlooking St Patrick’s Square under way. The
freehold project includes 14 retail shops at street level and a
19-site food court spread over two levels.
On the drawing board is Manson TCLM’s $675 redevelopment of the 4285sq m NZ Herald site at 46 Albert St, which
spreads from Wyndham St down to Mills Lane.
The plans for what will be the city’s tallest office tower at
190 metres include a 150-175-room hotel, 40,000sq m of
office space on 1500sq m floorplates with 3.2 metre stud
heights, luxury brand shops, a garden penthouse viewing
floor and 300 car parks. Manson TCLM has already obtained
demolition consents.
The LK & M site at 51-53 Albert St has been sold a couple
of times recently and there is a rumoured
conditional $9 million agreement on the site
for yet another sale. It has resource consent
for a 46-storey apartment tower.
Two 1920s constructed adjoining buildings
Chris Hutching
Conrad Properties’ residential and retail tower
Precinct Properties’ new Downtown office and shopping complex
Street improvements after the city rail link is built
at 83 and 85 Albert St have just been sold to law firm Kirkland
Morrison as premises for its practice, in a deal brokered by
Jonathan Ogg of CBRE.
The sale equated to $12,800 a square metre. Mr Ogg says it
is possible to add further floors to the character property. The
buildings have attractive character facades with period features such as sash windows and decorative plasterwork, typical of many of Albert St’s older commercial buildings.
At the bungy jump site on the corner of Albert, Elliott and
Victoria Sts, Shanghai-based developer Furu Ding is planning
to start early next year on the country’s second-tallest building.
NDG tower, at just 119 metres short of the 328-metre Sky
Tower, will be a $350 million, 209 metre, 52-level skyscraper
housing apartments, shops, restaurants, cinema, two skydeck areas and a possible 302-room Ritz-Carlton hotel. The
development is expected to take five years.
While bricks and mortar dominate the skyline, the CRL
gives the council and private developers the opportunity to
make the street more attractive to office workers and shoppers.
However, the challenge is to also provide green space and,
to this end, the council has designed a linear park running
from Albert Park along Victoria St to Albert St. Fewer traffic
lanes, wider footpaths and a wave of green vegetation will
give Victoria St up to Albert St a picture postcard image.
Further up at 135 Albert St, the council’s headquarters, a
review of all council assets could mean the building is sold
and then leased back to the city fathers. The council paid $104
million, spent $24.5 million on fitting it out for staff and councillors and an additional $28.9 million in capital costs will be
poured into the property over the next decade.
The council is looking at all its assets as it seeks alternative
ways to fund projects.
Mr Ogg says the transformation of Albert St is inevitable.
“As lower Queen St has become the home of luxury international brands with rents pushing $4000 a square metre, we
will see more focus on Albert St as it becomes the home of the
second-tier of swish shopping brands.
“Rents are as low as $500 a square metre in some parts of
Albert St but, with many projects planned for the street and
improved infrastructure, rents will rise, though there will
always be a gap between Queen and Albert Sts,” he says.
The council is planning for 128,000-140,000 workers and
upward of 45,000 residents in the city centre by 2032, giving a
density level of 8000-plus people per square kilometre of the
CBD’s four square kilometres. “They have to be housed and
work somewhere. Both local and foreign developers have
been eyeing the street for some time,” Mr Ogg says.
“Many of the new workers will be hired by firms leasing
space in the new office developments, particularly at the bottom end of Albert St. The council’s development framework
and opportunities include large commercial buildings without height restrictions,” he says.
According to council statistics, almost one in three jobs in
the business services sector are located within the city centre,
accounting for 50% of all jobs in the CBD.
Employment projections estimate the city rail link will be
the catalyst for 5000-20,000 additional jobs by 2041. Office
development is high on the council’s priorities, with the redefined “engine room” the focus for new premium and A-grade
office towers.
The city rail link’s Aotea Station will consolidate Albert St’s
role as an important destination hub in the city centre.
The suburb of Hornby on
the western outskirts of
Christchurch has one of the
largest concentrations of
industrial activity in the city
and New Zealand.
One of the latest developments under construction
is a 1ha factory by developer
Calder Stewart for Fletcher
subsidiary Easysteel.
Calder Stewart will either
retain the property at Sir
James Wattie Drive or sell it,
with Easysteel signing up for
an 18-year lease.
Easysteel will join other
tenants on the Calder Stewart business park including
McDowell, Foodstuffs, Sleepyhead, Calder Stewart, Epoch
and Maxwell Contract Warehousing.
The structural steel sector has grown its share of
the Christchurch multi-level
construction market to more
than over 60% from virtually
nil a few years ago.
Industry proponents have
promoted steel as a building
material with recognised performance in seismic-prone
areas. There are about 80
steel fabricators nationwide.
Recently completed
Christchurch projects, or
projects currently in development using locally fabricated structural steel include
the recently completed Forte
Health medical centre in Kilmore St, commercial buildings at 335 Lincoln Rd and
219 High St, the Botanical
Gardens Visitor Centre, and
the Isaac Theatre Royal.
Meanwhile, NZX-listed
Goodman Property Trust is
selling five of its industrial
properties in Christchurch.
They include three new
GLASSWORKS INDUSTRY PARK: Three new buildings in the park are
on the block
buildings in the Goodmanowned Glassworks Industry
Park, Hornby and another
two in the Show Place Office
Park at Addington – arguably
one of the most significant
property portfolios to come
onto the market since the
Canterbury earthquakes.
John Dakin, chief executive officer of Goodman (NZ),
says the disposals are part
of a wider asset sales programme.
“We are focused on
organic growth with
increased levels of development activity being funded
through asset sales.”
The trust completed
almost $150 million of
asset sales in the last financial year with about 25% in
Christchurch.
Mr Dakin said Goodman expected to announce
between $100-150 million of
new development projects
this financial year, funded
through asset sales in Auckland and Christchurch.
Goodman Proper ty
Trust has developed about
40,000sq m of industrial and
office space in Christchurch
since 2008. Occupier or customer demand remains
strong in all of Goodman’s
estates with the majority of
recent new development
projects announced at High-
brook Business Park in East
Tamaki, Mr Dakin says.
The Glassworks Industry
Park portfolio comprises four
buildings housing premium
businesses tenants MOVE
Logistics, DHL, Packaging
House, Cirtex and Bridgestone. The total net lettable
floor area is nearly 30,000sq
m spread over 3.5ha. All the
buildings were completed in
2014 and have a staggered
lease expiry.
Late last year, Goodman sold Placemakers and
Big Chill at the Glassworks.
Placemakers fetched $7.2
million, representing a 6.5%
yield. The sale was made
up of $6.45 million for the
building and $750,000 for
the 3,000 square metres of
expansion land. Big Chill sold
for $7.1 million, with a 7.1%
yield.
Mr Dakin says the trust
will only sell if the price is
right.
Goodman Property Trust
is one of the biggest property
companies listed on the NZX
and regularly recycles properties to raise capital for new
developments.
According to Forsyth
Barr’s most recent analysis
the listed property sector is
fully priced.
In the context of
Christchurch, industrial leas-
ing specialist Greg Mann
who recently joined Bayleys
from NAI Harcourts says the
market may be peaking.
There have been big market changes since 2014, he
says.
In Wigram, Sockburn and
Hornby there has been a lot
of leasing activity but there
have been some big increases and decreases in availability of specific stock of certain
sizes, which in some cases
have not followed the same
trends, he says.
“In the past we’ve seen
more leasing activity when
there is a lot of stock available.
“Right now, the situation
is unique in that industrial
vacancy has increased due
to increased supply and a lot
of new properties being built
but we continue to enjoy a
relatively strong underlying
economy. It will be interesting to see if this translates
into very strong leasing activity.
“Rental rates are strong
and yields have been dropping. The handbrake is firmly
on the dairy industry. For
years there has been plenty
of dairy money to go around
but the tap has been turned
off and the trickle down
affects may become quite
serious.
“I’ve been asking some of
my clients who have thought
about selling properties
whether they think the market is at or near the top of
the cycle. As it’s impossible
to know before it’s too late,
selling at a point you think is
near the top is about as good
as you can call it.
“Personally, I think we’re
at the top of the cycle,” he
says.
YOUR LOCAL TEAM OF PROPERTY EXPERTS
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Strategically located, this is the only operator servicing the surrounding area.
A strong trading record, 153 units returning in excess of $209,000pa,
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AUCTION: 11am Thurs 24 Sept, 155 Te Rapa Rd, Hamilton
VIEW: www.naiharcourts.co.nz/HCM6672
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E: [email protected]
MONARCH COMMERCIAL LIMITED
P: 07 850 5252
‘As is where is’
Get a slice of this - clever investment
FOR SALE
FOR SALE
Licensed Agent REAA 2008
For Sale
1014 Ferry Road, Christchurch
153 Madras Street, Christchurch
• Land area 4,373sqm
• Building size 1,590sqm
• Zoned Business 4
• Invest, occupy, develop
• Property to be sold on an ‘as is
where is’ basis
• Completely renovated to a high
commercial standard
• Quality established tenant (Winnie
Bagoes 23 years old)
• $205,930 net per annum
• NBS rating of 100%
• Make this your jewel
• Wide frontage
Chris Harding 021 353 813 [email protected]
www.jll.nz
Travelodge Welly
The 132-room, four-star Travelodge Hotel in Wellington is
for sale. The property is owned by Australian-owned Toga
NZ No 1. The hotel is subject to a new 15-year management agreement to international operator TFE Hotels (Toga
Far East Hotels) under the Travelodge brand. It is located
in the heart of the Wellington central business district and
includes 132 guest rooms, a restaurant and five conference
and meeting rooms. It underwent an $11 million refit in 2009
when it was rebranded as the Travelodge Hotel Wellington. Land records show it has a rating value of $13 million.
The building, with a seismic rating of 100% of new building standard, was formerly part of the Plimmer Complex,
which also encompassed a 14,595sq m office tower and
car park. The Plimmer Complex was subdivided into three
separate freehold strata-titles and the hotel is the final offering following the recent sale of the office tower and car park.
The office tower was sold to Wellington First Properties,
whose directors are Geok Tan and Tong Tan of Singapore, in
November 2014 for $17.5 million.
AIA’s property
Auckland International Airport receives nearly half its operating income from commercial property – $228 million of
the total $508 million turnover. The NZX-listed company
this week reported its annual earnings, which reveal retail
income of $132 million, car park income of $46.6 million,
and commercial property income of $50 million. “The transformation of our non-aeronautical land has continued and
Auckland airport is becoming New Zealand’s most popular
new business park. Occupancy of our $763-million property
investment portfolio now stands at 99.9% and in the past
12 months we have seen an exciting range of businesses
decide to relocate to the airport, including Coca-Cola Amatil
and Fuji Xerox. Our two hotels, the Novotel and Ibis budget,
not only have provided much-needed accommodation for
travellers this financial year, they also have been very successful business ventures.” Auckland Airport has started
work on the design for a third hotel.
Precinct well positioned?
Is listed Precinct Properties preparing to pick up new acquisitions? With a gearing ratio of just 20% (11% after settlement of pending sales), the company seems well positioned,
although it has significant capital commitments tied up with
its development block at the bottom of Auckland’s Queen
St, with three buildings, and a fourth in the planning stages,
as well as another two buildings just across Albert St. Precinct has been innovative in its funding sources – in the past
year, it has raised around $350 million from issuing bonds
(an off-balance sheet liability), equity and loans from US
institutions. The US loans are in US dollars, but “hedged to
remove all currency risk, a first for the New Zealand property
sector” – well that was the story in the annual report written
before recent global financial events. “In particular we were
very pleased with the outcome of the US transaction, which
was fully swapped back to New Zealand dollars to remove
currency risk,” the annual report says.
Fresh landing
The Landing at Wigram Skies, Christchurch has a new tenant – Mexicali Fresh, the 14th store since its inception in
2006. The Landing is a “$40 million” town centre under construction at Ngai Tahu’s mixed use development at Wigram
Skies in west Christchurch.
New logo/brand
For Sale
COLLINS ROAD SELF STORAGE
AROUND THE TRAPS
• 776.10sqm building size
• Solid lease
• Invest in the future
• Be surrounded by the rebuild
Hoteliers in Queenstown have a new tool – Destination
Queenstown’s new brand. “Initial research began in late
2013 to review Queenstown’s brand health, reputation and
position,” an organisation document explains. “This included assessing the motivations and needs of Queenstown’s
visitor market to ensure the Queenstown brand aligned
and represented the positive tangible and emotive values
associated with Queenstown. The extensive research was
distilled down to four main brand pillars, which are the foundation of the brand and represent the sense of escape for
visitors by coming to Queenstown, the majestic landscapes,
the openness and warm welcome extended to visitors and
the unique and vibrant energy of this place.” The new logo
has the appearance of coloured triangular shapes presumably representing mountains. The cost of the research was
$24,000 and about $35,000 has been invested in the “creative development and design process of the brand.”
Chris Hutching
[email protected]
Sally Lindsay
[email protected]
Chris Harding 021 353 813 [email protected]
Licensed Under REAA 2008
26
August 28, 2015 / The National Business Review
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY
The National Business Review / August 28, 2015
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY 27
SUPPLIED CONTENT
SUPPLIED CONTENT
NZ investors leading strategic
growth in Auckland
MUCH HAS BEEN WRITTEN
recently about overseas purchases
of New Zealand property.
Most recently attracting attention was KPMG’s analysis of Foreign
Direct Investment in New Zealand
assets, saying that 59% of overseas
investment comes from North
America, Australia and Europe - and
in particular from Canada, at 22% of
total investment.
However, while it is good news
that overseas investors are attracted
to the fundamentals of New ZeaA view of Clinker Place, New Lynn
land property assets, this activity
is in reality only part of the current
market dynamics for increased
investment picture.
residential and commercial supply,
Onshore investment still leading
Andrew Stringer, National Direc- particularly in Auckland.
“Purchasers have confidence
tor – Capital Markets for CBRE New
in buying non-income-generating
Zealand, says that the attention on
land and holding it while they
overseas buyers masks another,
determine an optimal development
equally real trend: Kiwis are makscenario,” he says. “All the purchasing the bulk of the strategic land
purchases, particularly in Auckland, ers we are talking to are seeking to
with a view to meeting a range of
develop land reasonably quickly.
demands for growth.
They are not displaying what many
“CBRE has been involved in
commentators have characterised
more than $180 million of land
as land banking simply to make
transactions over the past 12
capital gain.”
months,” he says. “Of this total,
He adds that, unsurprisingly,
63% by value were to onshore, New
investment is strongly focused on
Zealand, buyers - and if you view
areas with significant current and
the transactions by land area, the
proposed investment in commuproportion is closer to 70%.
nity facilities and infrastructure, particularly transport.
With Auckland’s population
Most buyers local
expected to grow by up to one mil“Amid the speculation around the
motives and identity of overseas
lion people over the next 30 years,
purchasers, our investment sales
eight prioritised Metropolitan
record highlights that the majority
Centres are receiving a high level
of transactions are to onshore parof investment and focus under the
ties who are focused on meeting the Auckland Plan, including Hobsondemand for growth in Auckland as
ville Point and New Lynn.
soon as practicable.”
“Hobsonville Point has demStringer says that the demand
onstrated how well large scale
for land is a response to clear
commercial and residential com-
products. Focused on expanding
their footprint and offering around
the country, the company is well
funded, has a good land bank of 25
sites now in place for development,
and is well positioned to meet the
needs of the growing number of
older New Zealanders.”
Institutional investors
developing to improve
portfolio quality
munities can be created in major
growth nodes,” says Stringer. “We’re
been involved in three separate
land sales totalling 72,000 sqm in
the area, all earmarked for residential and aged care uses.
“We have also been involved
in transacting 195,000 sqm of residential development land in New
Lynn, demonstrating the evolution
of mixed use development. There’s
an existing town centre, a sophisticated public transport network that
has been heavily invested in by a
number of motivated parties, and a
mandate to build more commercial
and residential spaces - and fast.”
Driven by shopper demand
“Kiwi Property recently announced
it will be investing $36 million in the
LynnMall shopping centre, upgrading and expanding the entire facility
to include a new outdoor dining
and entertainment precinct. Driven
by shopper demand and positive
growth in the catchment area, Kiwi’s
investment is indicative of the level
of interest and priority the sector is
giving to New Lynn.”
Ageing population driving aged
care investment
In addition, New Zealand’s ageing population is leading to considerable investment in developable
land by the big operators in the
sector.
“Statistics released in June 2015
show that the 65-and-over age
group made up 14.3% of the population in 2013, and that’s projected
to reach 23.8% in the next 30 years,”
says Stringer. “Opportunities are
being realised by the major retirement and aged care operators. One
such is Summerset Group Holdings
Limited, which recently acquired
an interest in a 2.5 hectare site in St
John’s, one of Auckland’s soughtafter eastern suburbs.”
Summerset also acquired the
2.3 hectare former KiwiRail site
on Cheshire Street in Parnell, with
both sites marketed by CBRE’s John
Schellekens and John Holmes.
“Summerset has lifted its build
rate target for FY16 to 400 retirement units, up from 300 for FY15,”
says Stringer. “They are seeing
record sales of occupation rights
and profit, and experiencing good
demand across the country for their
According to Stringer, another
factor is the work currently underway by a number of major investors to improve the quality of their
portfolios.
“At a time when the City Rail
Link is providing investment
stimulus within the CBD, which we
have already seen with the Downtown development and the Aotea
precinct next – not forgetting the
International Convention Centre
– significant investment in CRL stations will materially shift pedestrian
linkages in the area. This is driving
strategic acquisitions now for future
development.
“Additionally, major investors
are actively developing in order to
improve the quality of their portfolios, as their ability to acquire quality
investment stock is being stymied
by a lack of opportunities. If you
look at the work being undertaken
by Precinct Properties, DNZ and
Cooper & Company for example,
their recent announcements all
show that they have to develop to
do so, which makes strategic landholdings key.
“So, given what we’re seeing now,
with what we know is coming in
terms of population growth and the
Auckland Plan’s node and transport
focus, we’re expecting continued
demand pressure for strategic holdings adjacent to major infrastructure investment and supporting
amenity.
“One of the great outcomes of
our recent success is that Auckland
will probably see the $180 million
of land converted to residential and
commercial developments that
could have an end value of more
than $1 billion.”
Transforming real estate into real ADVANTAGE
Perspective
We align knowledge and
experience with commercial and
cultural insight. Our actionable
perspective is the clear
advantage that clients build on.
Oyster Experiences Year of Growth
and Value in Funds Management
Scale
Some say bigger is better. But
we think better is more than
400 offices in 60 countries,
working together to solve our
clients’ most demanding real
estate challenges.
Connections
We bring together clients,
opportunity and capital.
Together, we transform every
square metre and skyline into a
landscape of opportunity.
CBRE can build advantage for your business through exceptional
outcomes that drive value and growth. Find out more at www.cbre.co.nz.
LEADING COMMERCIAL PROPERTY
AND funds management company,
22%
Oyster Group, is going from strength
to strength and offering a growing
line-up of investment products for
investors to choose from.
Since it brought on ASX 200
6%
listed Cromwell Property Group
as a 50% partner 12 months ago,
Oyster has built scale and been
9%
able to provide investors with
access to more frequent commercial
property opportunities.
It has continued to publicly offer
retail investors high quality commercial
properties, whilst also offering private
placement property investment opportunities for small investment groups.
Oyster’s drive is to enable as many
investors as possible to invest in the commercial properties and funds which the
company offers.
The reduction of the minimum investment to $50,000 in its more recent public
offers has proven a successful step in this
direction, with new investors comprising
more than 50% of total investors in its
two latest public syndication offers – the
Cardinal Logistics building at Westney
Road in Mangere and the ANZ Business
Centre in Corinthian Drive, Albany.
Commercial property returns, particularly in New Zealand which substantially
outshone the global market last year, are
increasingly being seen by many investors as an attractive complement to lower
bank deposit rates.
Well located assets have historically
also proven robust through changing
economic cycles.
ment, leasing and transaction services
to the Group’s portfolio.
“We’re focused on providing
optimal investment returns and
7%
27%
building investor wealth through
the careful selection, acquisition,
Geographic
structuring and management
spread of
9%
of commercial properties and
investors
property portfolios throughout
New Zealand.
As part of its offering, Oyster
handles the day-to-day manage13%
ment of all property funds including
property and facilities management,
26%
accounting and distribution of income
to investors.
Schiele says proportionate ownership
of
commercial
property will continue
■ Northland 4%
to
be
attractive
for groups of individu■
Wellington
7%
■ Auckland 27%
■ South Island 9%
als looking to passively invest in assets
■ Waikato 26%
■ Christchurch 4%
of significant value without any of the
■ Bay of Plenty 13%
■
Overseas
1%
hassle of daily management – all the work
■ Other North Island 9%
is done by Oyster. Because the properties
are fully managed, investors do not need
to be experts in strategically evaluating,
owning and managing buildings and tenants.
Outside of syndication and property
funds, Oyster continues to extend the
management services it offers to third
party private and institutional owners –
in particular in the retail property sphere
where the Group has specialist expertise.
This growth includes providing development management and retail leasing services to clients.
9%
Geographic
spread of funds
management
portfolio by
capital value 63%
■ Auckland 63%
■ Hamilton 9%
■ Other North Island 6%
■ Wellington 22%
4% 4%
1%
Strong Investor Appetite for a
‘Suite’ of Investment Products
Oyster’s Chief Executive, Mark Schiele,
says the company now has strong investor appetite for investment opportunities
beyond traditional single asset syndicated property investment structures.
“With current interest rates, investors are seeking alternative options for
income and they tend to be drawn to
bricks and mortar investments.
“Commercial property returns are
attractive. Against this background, it’s
beneficial for Oyster to continue to create
and offer a suite of products which meet
a range of investor requirements.”
Schiele says this is particularly important for investors who may have a relatively modest level of capital to invest.
“We do not want commercial property
investment to be seen as out of reach. It
needs to be accessible for as many potential investors as possible.”
Oyster is planning to launch a Direct
Property Fund in coming months, offering investors exposure to a diversified
portfolio of quality office, industrial and
retail assets throughout New Zealand.
It will deploy investor funds in to a variety
of assets which fit the fund’s investment
mandate and criteria covering location,
lease term, tenant quality and occupancy.
It is the company’s intention to grow
the fund relatively quickly, to provide
investors with investment opportunities
not available elsewhere.
Become a Commercial Property
Investor
Oyster Group manages over $750 million
of property assets through a combination
of property funds, syndicates and third
party client property management mandates.
“With over 25 years’ experience in the
commercial real estate sector, we strongly
believe that commercial property assets
are one of the most reliable investments
available, and we want to share that
opportunity with as many investors as
possible,” says Schiele.
Oyster in Top Tier of New Zealand
Commercial Fund Managers
Oyster has built an enviable reputation
for reliability and success in property
funds management, where it is a recognised market leader in sourcing and
structuring property funds, capital raising and asset and property management.
Its growing Property Funds Management business provides investment management, asset management, property
management, development manage-
Expanding the Investor Offering
Long Term
Oyster’s most recent successful syndications include the ANZ Business Centre and the Westpac building –
both on Corinthian Drive in Albany, Auckland. The ANZ office and retail property had a minimum investment of
$50,000, whilst the Westpac building was restricted to 11 investor interests of $750,000 each
To register interest in any of Oyster’s
investment opportunities or for further
information please contact:
James Molloy
Ph (09) 632 1287 or email
[email protected]
28
August 28, 2015 / The National Business Review
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY
The National Business Review / August 28, 2015
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY 29
SUPPLIED CONTENT
Being bullish with
property investment
We are a country of avid property
investors – it’s part of our heritage
and we like it. We always have and
probably always will.
The famous author Mark Twain
once wrote “buy land, they’re not
making it anymore” and this is as
true today as it’s ever been, especially in New Zealand.
But property investment is not
always the easiest concept to get
your head around.
David Kitson, Director of Taurus
Management Limited, says over
the years he’s dealt with many
experienced property investors but
their number is far exceeded by
those interested and wanting to get
started.
“It’s one of the best parts of our
role – guiding and supporting people eager for their first investment
while also helping experienced
investors find the best opportunities.
“We understand the varied
needs of investors so we’ve made
our approach different to other
property investment companies,”
he says.
Taurus Management Limited is
part of Taurus Group, a diversified
strategic financial firm including
Chartered Accountancy, Capital
and Finance and Project Management.
“We have all the expertise here
under one roof,” says David Kitson,
“so we can deliver property investment integrated with the important
principles of other disciplines,
and most importantly, chartered
accountancy. We believe this challenges the norm, builds relationships and trust, and provides a solid
offer to investors.”
David Kitson went on to explain
the four principles for all property
investors.
Finding the right asset
As a company managing $100m of
commercial and residential property assets with over 500 investors
Taurus has a regular stream of proposals. “We are very selective and
apply highly critical due diligence
to find the best – of the 15 we’ve
received in the last year we’ve only
pursued two,” he says.
Taurus currently manages nine
separate syndicates including:
DAVID KITSON:
Director of Taurus
Management
Limited
retail, office, healthcare, services,
industrial, warehouse, hotel, hospitality, car parking and residential.
It has recently launched Taurus
Artemis, an investment in the freehold of a network of Childcare Centres and has just announced Taurus
Tannery, a boutique retail centre in
Christchurch.
The syndicates it manages are
mostly niche assets and it’s more
Taurus Services
n Chartered Accounting Services
n Feasibility studies
n Acquisition strategies
n Ownership structuring
n Syndicate promotion and distribution
n Development strategies and property restructuring
8.6%PA
PROJECTED
PRE-TAX CASH
RETURN FOR
FIRST YEAR.
INVESTMENT OPPORTUNITY
BOUTIQUE RETAIL CENTRE
CHRISTCHURCH
64 INDIVIDUAL TENANCIES
likely to support a smaller project
with limited investors than big box
schemes with hundreds of interests.
“This fits how we like to operate;
providing personal service where
the investors are big fish in a smaller pool,” he says.
“When it comes to property
investment we know it builds confidence to have personal and direct
access to the syndicate manager.”
Increasing your wealth
After all, this is the reason why people like property investment and
one of Taurus’s founding principles
is helping wealth grow for commercial, personal or community
reasons. There are two sources –
capital growth and regular distributions.
Taurus team works in partnership with investors to deliver the
best possible return and being
linked to a larger group means it
has easy access to other experts.
n Banking relationships and negotiations
n Syndicate management - investor relations and communication
nOverseeing:
n project and building management
n maintenance, upgrades, remediation
n New Building Standards compliance
n leasing and tenant negotiations
n sales and marketing strategies
• Managed Investment Scheme,
with investors each owning a
proportionate interest.
• 350 interests of $50,000 each.
Minimum subscription of $100,000
available only to eligible investors
or a minimum investment of
$750,000 under clauses 3(3)(b)(i)
of the Financial Markets Conduct
Act 2013.
• Historic, unique buildings, fully
restored.
Making it simple
Darren Crossland, Manager at Taurus, explains the importance of a
“tell it how it is” approach.
“The tools of our trade are investor relationships and we believe in
being resolutely open, transparent
and communicative,” he says.
“There’s no doubt this approach
leads to the best decisions and
results. We explain all the ins and
outs and you will always have
someone who listens and understands what you want from your
investment,” he says.
Trust in your manager
Property investment is a relationship business and as a New Zealand company with schemes across
New Zealand Taurus understands
trust is vital.
“We think our property team is
one of the best,” David Kitson says.
“We never shy away from tough
decisions. We will always work
hard for solutions and are resolute
in achieving business and personal
goals.”
Taurus Group was established
almost 20 years ago. It began as a
Business Advisory and Corporate
Finance operation and merged in
2000 with a Chartered Accountancy
practice. It then developed into
an integrated practice with clients
nationwide and now has over 40
people based in Christchurch and
Auckland.
• 64 Individual Tenancies with an
approximate WALT of 5.0 years
depending on current lease
renewal negotiations.
• Purchase Price of $31.5m.
• Equity being raised of $17.5m.
• $9.6m is already fully underwritten.
• Overall projected yield of 8.6%
based on LVR of 44.4%
• Quarterly cash distributions.
• Restored and new buildings 100%
of New Building Standard.
• Scheme will be professionally
managed by Taurus Tannery Ltd.
• Proposed Loan to Value Ratio of
44.4% on purchase price.
• Scheme will be overseen by
Foundation Corporate Trust as
Supervisor.
Outsourcing his
way to wealth
When Kevin Chapman set out to invest
in Auckland property, this wasn’t quite
what he had expected…
I MEET WITH BUSINESSMAN Kevin Chapman
outside his new investment property, this is only
the second time he’s seen it.
“I’ve seen it online of course, but the
inspections and reporting was all done for me.
I’ve not really had any need to come out here to
see it.”
The house is hardly impressive. ‘Memorable’
doesn’t quite fit the description either. But Mr
Chapman seems delighted.
“You see that there?” He’s pointing
at a lacklustre exterior paint job. “That’s
weatherboarding, built in the 1960s. You’ll never
see that leak. It’s a solid old thing, but that’s not
why it was chosen for me.”
‘Chosen for me’ is an interesting term to
use when describing a house purchase. But
in this case, it’s appropriate. Kevin Chapman
played a very small part in the acquisition of this
investment house. Short on time and property
expertise, Kevin asked Martin Dunn of City Sales
Investment to take care of his property investment
for him.
Paying someone to find and purchase a
house for you isn’t exactly standard practise
here in New Zealand. But the Buyer’s Agent
model is not a new thing. In the
USA it’s commonplace to
commission an agent to
take responsibility for
your house purchase,
Buyers Agents are
gaining popularity too
in parts of England
and Australia. But
what is it, exactly, that
a Buyer’s Agent does?
“Everything”, says
Martin Dunn, head
of both City
Sales
Apartments and his housing investment arm, City
Sales Investment. “When a client signs me to act
for them, my team analyses hundreds of potential
investment properties. We consider things like
price point, local infrastructure changes, culture
and culture change, date of build, construction
material, size, aspect – many, many things. Then
I start looking at them up close and out of say,
100 houses, I usually end up with only three or
four that I am prepared to hang my hat on. It’s
one of these that I’ll buy for my client.”
Considerable work, perhaps, but it’s the next
bit which Martin claims adds the most value.
“Once I’ve found the house I’m interested
in, I check it out with an eye that only someone
with my experience can offer. Checks need to
be done much quicker than you’d imagine in
this market, the kinds of houses I’m interested in
sometimes have multiple offers made on them
within 24 hours of being listed. I need to find it,
check it out and make an intelligent offer very
quickly – which might well mean bidding for it
at auction. My clients just don’t have the time to
act this quickly, but this is what I do seven days
a week.
SUPPLIED CONTENT
Once I’ve successfully negotiated the
transaction, I’ll carry out settlement on their
behalf, then find tenants and manage the
house for them through City Sales Property
Management. Many of my clients have never, and
will never see their investment house in person.”
It’s a very buoyant market in
Auckland at the moment and it
favours the Vendor. As a Buyer’s
Agent, I even the playing field.
– Martin Dunn
Back inside Mr Chapman’s house he walks
me around three generously sized bedrooms
and explains to me Martin’s reasoning behind his
purchase. “It’s the new ferry terminal you see,
only a few minutes’ walk away. When I first met
with Martin he stressed to me the importance of
infrastructure change to an area, which brings
with it a culture change. Birkdale used to be
regarded as poor and in some places, downright
dangerous, but now with three road access
points and a ferry service connecting it to the
CBD, Birkdale is becoming a very desirable
area.”
Mr Chapman discussed a couple of other
areas with Martin, but decided on Birkdale after
being explained the effects of infrastructure
changes on an area.
“He [Martin] was quite straight talking when
it came down to it. He wouldn’t entertain my
thoughts on Albany even for a second and he
didn’t hold back from correcting my expectations
regarding areas and values. I’m pleased I got him
involved, my brother has been trying to buy for
a few months now. Martin had my investment all
wrapped up and managed within a few weeks of
me signing up with him. He’s now speaking with
my brother.
I don’t have the time to do what
Martin does.
– Kevin Chapman
I operate from three different offices around
Auckland and I’m often working weekends. When
I’m home I just want to be home with my family, I
was happy to pay for his service.
I’ll be looking to purchase again in the next
6-12 months. I wouldn’t think of doing it on my
own anymore.”
City Sales Investment
purchases Auckland
housing on an investors
behalf. Schedule a
consultation with Martin
Dunn or request an
information pack,
[email protected] or
(09) 3030 601.
Based on an actual CSI client. Names and personal
details have been changed.
For a copy of the
Information Memorandum
& valuation, please contact us;
David Kitson
Taurus Group Ltd,
[email protected]
DDI: 03 345 8834,
Mob: 021 722 231
Darren Crossland
Taurus Group Ltd,
[email protected]
PH: 03 366 6087
Mob: 027 801 7103
WARNING The law normally requires people who offer financial products to give information to investors before they invest. This requires those offering
financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to this offer
because there is an exclusion for offers where the amount invested upfront by the investor (plus any other investments the investor has already made in
the financial products) is $750,000 or more, or where you qualify as an eligible investor. As a result of this exclusion, you may not receive a balanced set of
information. You will also have fewer other legal protections for this investment. Investments of this kind are not suitable for retail investors. Ask questions,
read all documents carefully, and seek independent financial advice before committing yourself. The Information Memorandum contains full details of the
investment including how the projected return for the investment is calculated and the rates associated with the investment and return. This document is
not an offer of financial products or other invitation to the public to subscribe for any financial products. Applications for investment may only be made on
the form set out in the Information Memorandum and only by investors certified as eligible investors or investors investing a minimum of $750,000 under
clauses 3(3)(b)(i) and 41 of Schedule 1 of the Financial Markets Conduct Act 2013. Returns are not guaranteed.
Request an information pack:
[email protected]
(09) 3030 601
www.citysales.co.nz/invest
30
August 28, 2015 / The National Business Review
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY
The National Business Review / August 28, 2015
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY
SUPPLIED CONTENT
SUPPLIED CONTENT
The new three level commercial building in construction on Highbrook Drive, Highbrook. Available for lease, completion November 2016
Highbrook – a world
class business park
SITUATED ON THE WAIOURU peninsula in
Auckland’s East Tamaki, Highbrook is firmly
established as New Zealand’s premier business park.
Bordered by the picturesque Tamaki River,
the 150 hectare estate has developed rapidly
over the last decade with key infrastructure,
including direct access to SH1, facilitating its
transformation from a successful horse stud
into an award winning business destination.
Owned by the NZX listed Goodman Property Trust it’s a world class development that
provides its corporate customers with property facilities purposebuilt to meet the specific
operational requirements of their businesses.
Surrounded by 40 hectares of parklands
and esplanade reserves, and with a range of
amenities to support its commercial function, Highbrook offers an exceptional working
environment for the 70 companies that have
already chosen to locate there.
These businesses, which represent a
diverse range of industries, support a daily
workforce of around 5,000 people.
CEO John Dakin emphasised the success
of Highbrook. “Around two thirds of the way
31
through its planned development Highbrook
has set the benchmark for new business
accommodation.”
With more than 40 prime industrial and
commercial buildings already developed, and
a combined value in excess of $850 million,
it’s a substantial estate that is continuing to
attract strong levels of enquiry.
John Dakin said “Sustained customer
demand is supporting a heightened level of
development activity with eight new projects,
totalling over $100 million, announced in the
last 18 months. It’s a substantial workbook
that reflects the unique attraction of this
award winning estate.”
With limited vacancy in prime space
throughout Auckland, the strategic location
and quality of Highbrook means it presents a
compelling business case for customers seeking design-built property solutions.
Metro Performance Glass is a business
that has recently chosen to relocate to Highbrook. The new 16,700 sqm office, manufacturing and distribution facility received the
excellence award for industrial buildings at
the Property Council of New Zealand Awards
in June 2015.
The best in category award acknowledges
the scale and success of the development,
assessing its merits across a broad range of
criteria. It’s another award for an estate where
the focus has always been on quality and consistency of design.
A sustainable development philosophy is
also being reflected in the innovative property
solutions that Goodman is delivering at Highbrook. The latest developments showcase the
very best in energy efficiency, building technology, systems and materials.
It is also the home of New Zealand’s first
Green Star industrial building, with the CourierPost facility achieving its 4 Star Industrial
Design rating in 2009.
Steel & Tube and Ford are two more substantial businesses to have had facilities built
in the last 6 months with new 7,770 sqm and
10,150 sqm warehouses developed since the
completion of the Metro Performance Glass
premises in December.
Existing customer relationships have also
generated new development commitments
from Big Chill, Machinery House and Virid-
Looking for
warehouse
space?
ian with 22,500 sqm of projects underway for
these businesses.
John Dakin said “These are the latest customers to extend their property requirements
with us and we are extremely pleased to be
facilitating their business growth.”
To take advantage of the current demand
Goodman is undertaking two industrial
developments on an uncommitted basis. The
new 3,000 sqm and 6,300 sqm warehouses
are of a size and design that will appeal to a
range of business occupiers, with scheduled
completion dates in early 2016.
Jarrod MacGregor said, “With Highbrook
fully occupied, continued customer demand
is the catalyst for these new development initiatives. We expect them to lease quickly and
medium sized businesses seeking high quality industrial space should act now to secure
new premises early in the New Year.”
It’s a similar story for commercial occupiers too, with a shortage of available space
being the catalyst for a new 3,137 sqm office
building.
The new development will neighbour The
Crossing, a retail and commercial centre that
provides amenity and support services to
the business park customers and wider East
Tamaki catchment.
The Crossing is Highbrook’s town centre. It
features multiple buildings arranged around
a podium base and linked by an open air
pedestrian plaza. Completed two years ago, it
is a highly successful development that incorporates office, retail, health & fitness and hospitality businesses together with a conference
centre and serviced accommodation.
Situated on a high profile site adjoining
The Crossing, the new three storey office
building is located among other professional
service operators. Childcare, banking, post
and further food and retail options are also
close by.
Fronting directly onto Highbrook Drive the
new building will offer uninterrupted views
out over the Tamaki River and across Auckland’s volcanic cones.
Jarrod MacGregor said, “With floor plates
of 1,000 sqm it’s a flexible design that can
be configured into smaller suites. With over
28,000 vehicle movements a day along Highbrook Drive it also provides valuable signage
opportunities.”
Scheduled to complete in November 2016,
the new office building continues a development programme that is delivering the
Highbrook masterplan, converting a strategic
greenfield site into a world class business
park.
New builds provide fresh opportunities
to bring your business to Highbrook.
Takapuna office vacancy
reaches historic low
TAKAPUNA OFFICE
VACANCY HAS fallen to its
lowest level in 10 years as
options for tenants dry up.
Vacancy surveys undertaken
by JLL show the market has
a 3.9% vacancy. A combination of restricted new supply
to the market and a surge in
demand from occupiers has
been the driving force behind
Takapuna’s low vacancy rates,
which have been sitting in
the low 4% range throughout
2015 according to JLL’s latest
research.
Head of JLL’s North Shore
team David Mayhew says,
“The Takapuna market continues to be a highly sought
after destination for businesses on the North Shore
has been very little moveOCCUPIER DEMAND
BACKED by stronger ecoment in the JLL series
for prime industrial
nomic performance is
rents in the last 5 years
being felt in the Auckland
but we are now seeing
Industrial market, triggera significant increase
ing new development and
in secondary rental figmoving rental levels higher.
Strong competition
SAM SMITH: National ures.”
between occupiers for
JLL research states
Director of Industrial
space means that landthat prime and secondlords are now in a posiary rents are now near
the highs that were
tion to drive increases
last seen before the
in rentals along with
Global Financial Cridropping off incentives.
This has recently started
sis, averaging NZD130
to filter down through to
per square metre and
the secondary market
NZD104 per square
where there has been an BEN CURRAN: Commercial metre respectively.
increase in rents for the
Sales and Leasing Agent Prime rental figures
first time since 2010.
increased 2.2%
National Director of JLL Indusduring the first half of 2015 while
secondary rental figures increased
trial Sam Smith says, “Landlords
by 10.6%.
are now in a controlling position
Industrial vacancy across the
relative to tenants which is driving
Auckland region is continuing to
strong rental growth, especially in
fall and is now at 2.9%. Occupiers
the secondary end of the market.”
are now being forced into lower
Smith adds, “Until now there
Built to a consistent design that is setting the standard
for business space these new facilities will feature:
Winner
Warehouse plus office, canopy and yard
High-stud and large canopies with secure yard areas
Attractive office spaces with excellent exposure
Well-presented landscaped premises
Generous on-site car parking
Commercial team of the year
Best deal of the year
Valuations team of the year
Young achiever of the year
>
www.highbrook.co.nz
CONTACT:
Jarrod MacGregor – Portfolio Manager
021 452 895 or [email protected]
under redevelopment, will
add an additional two new
floors to the supply, approximately 2,000 square metres
of much needed office space
in Takapuna in the first half
of 2016. Also scheduled for
release to the market around
that time is Building 4 at
61 Constellation Drive in
Rosedale as well as 33-45
Hurtsmere Road which has
undergone redevelopment.
This additional space however is expected to be leased up
quickly due to high occupier
demand in the area and larger spaces being increasingly
more difficult to acquire.
The future for Takapuna
looks very positive and the
opportunity to capitalise on
this trend exists for landlords. Commercial agents
Brandon Morley and Marg
Mills who focus on the North
Shore markets are currently
working with three large corporates with 1,000sqm plus
requirements looking to relocate to Takapuna, indicating
further demand.
grade and secondary premises,
with options remaining limited.
“We are finding that occupiers
are now steering toward secondary
stock opportunities and in some
cases where they cannot find a
suitable option they are forced
to look for build-to-suit options
to supply their accommodation
needs,” says Smith.
With strengthening rents and
diminishing options for occupiers
there has been a continued drive
in new build development in the
industrial market. An increasing
number of these new developments are speculative in nature
with developers more confident of
tenant demand and leasing conditions in the Auckland market.
Ben Curran, industrial sales and
leasing agent says, “The demand
for new build space remains
healthy and the majority of new
development is still primarily
focused in Auckland’s southern
markets. This is not surprising
given the fact that this is where the
vast majority of greenfield development land is located.”
Roughly 61,000sqm of new
build space entered the industrial
market over the first half of the
year with notable developments
including Duplex and Flex 2 in
the Auckland airport precinct and
Goodman’s speculative builds
at Highbrook which will provide
3,000 and 6,000sqm warehouses,
due for completion end of 2015.
Curran adds, “This is likely
to release some of the demand
pressure that currently exists and
provide more options to occupiers
that are unable to find adequate
space.”
A number of new developments
will provide some relief to the
critical shortage of stock with over
105,000sqm currently under construction. This figure is expected
to increase over the coming year,
as more space is demanded by
occupiers.
RICS
Awards
3,000 or 6,300 sqm
Warehouses
The new Mainfreight facility shown above
is similar in design and size to the new
warehouses being developed.
robust and is pushthe hands of land
ing rentals higher,
owners, pushing
nearing the peak
tenants to comlast seen in late
pete more on
2007. Both the
price for comupper and lower
mercial space.
series of rental
Mayhew configures saw a
tinues, “Rents
strong uplift
are forecast to
JLL North Shore team
over the last six
move upward
head David Mayhew
months with an
over the shortincrease of $10psm, as the
term with no indication of
average rents are now sitting
demand from tenants lessat $241psqm.
ening. As market enquiry
With the current marcontinues to increase, we
expect to see more property
ket conditions making the
owners explore the options
option of new development
of redevelopment and refurmore viable, there have been
several landlords evaluating
bishment of their buildings
their options to redevelop or
to take full advantage of the
start new projects in the area.
current conditions.”
Occupier enquiry remains 1 Byron Ave which is already
Limited stock and high demand driving up industrial rents
For Lease
•
•
•
•
•
and with limited supply
coming online, landlords are
feeling confident in respect
to occupiers.”
“Commercial occupiers
are becoming increasingly
attracted to Takapuna not
only for its coastal environment but due to its ability to
provide a balance between
cost efficiency and quality
in a decentralised location,
just a 10 minute drive from
the Auckland CBD,” says
Mayhew.
Takapuna has stolen the
spotlight in terms of suburban rental growth increasing
by 5.9%. Decreasing vacancy
rates are shrinking tenants’
options in the area and putting the bargaining power in
Access to foreign
investors, JLL sold largest
CBD office tower in NZ
Market leading research
to help you make the right
decisions
Delivering award winning service to help
you make the right real estate decisions
Bruno Warren – Development Manager
021 506 010 or [email protected]
Auckland +64 9 366 1666
Wellington +64 4 499 1666
Christchurch +64 3 341 8210
www.jll.nz
32
August 28, 2015 / The National Business Review
SPECIAL REPORT: INVESTING IN COMMERCIAL PROPERTY
SUPPLIED CONTENT
Izone ticks all the boxes
The old adage ‘location, location, location’ has never gone
out of fashion in the property
investment world because, while
it might be a cliché, it is a gold
standard that investors ignore at
their peril.
There is an equally important
factor to consider … cost. Commercial developers involved in the
rebuild of central Christchurch
have been plagued by cost overruns, not just from spiralling construction costs but because the
government-imposed blueprint
had the effect of restricting the
number of building sites and promoting scarcity, inflating land values.
A notable exception has been
one of the extraordinary success
stories of commercial property
development within the region –
the 180 hectare Izone industrial
park at Rolleston. As the NBR’s
own Chris Hutching reported in
July, “Izone cuts it with a sharp
price focus,” with lots selling
some 40 to 60 percent cheaper
than similar industrial land only
a few minutes away but within
Christchurch city boundaries.
It is New Zealand’s largest, fully
consented industrial park. It was
established by the Selwyn District
Council 10 years ago and is managed for the council by Hughes
Developments.
So Izone certainly hits the ‘price’
button, but how about its location?
It wasn’t too long ago in the history
of commercial development in
Canterbury that Christchurch was
the key place to be.
‘Greater Christchurch’
Out-of-the-city satellite locations
were perceived as less attractive to
the investor because they were not
as popular with potential tenant
companies and their staff. Unlike
Auckland, Christchurch employees have traditionally not had to
commute more than a few kilometres to work and were resistant
to travelling another 10 minutes to
Rolleston.
That is no longer the case. Even
before the earthquakes the Selwyn
District and Rolleston town were
the fastest growing in the country
in terms of population and economic development. Add into that
mix much improved motorway
connections – which significantly
reduce travel times between cen-
tral Christchurch and Rolleston
– and the earthquake-induced
migration of businesses to satellite
areas, and what you have now is a
single, ‘greater Christchurch’ commercial real estate market.
Sales the proof
Even before the Canterbury earthquakes Izone proved popular, with
land selling at a rate several years
ahead of predictions.
Izone has taken full advantage of this new socio-economic
landscape offering property buyers very competitive packages
that exemplify the dual cost and
location investment criteria.
Some 65% of the project is sold,
with the final block of land (Stage
7), released for sale last month,
already attracting keen interest.
The success of Izone’s locationand-cost strategy is evidenced
by its sales figures. During an 18
month period ending in December 2014, the park sold as much
land as the combined sales in
all business parks within the
boundaries of Christchurch city.
Buyers have ranged from businesses looking to locate to, or relocate within, the Christchurch area,
to investors planning to attract
good tenants and accrue value.
With Izone located at the heart
of central Canterbury’s agricultural production, a large proportion
of the more than 60 companies
located within the park service
the rural sector and/or on-process and distribute food and textile products. Allied industries are
themselves ahead of this reliably
predicted growth.
The final ingredient that points
to a very bright future for those
businesses or investors associated with Izone is that the business park is also home of Port of
Tauranga’s new fully operational
intermodal freight hub – Metroport Christchurch, Canterbury’s
During an 18 month period
ending in December
2014, the park sold as
much land as the combined sales
in all business parks within the
boundaries of Christchurch city
now, in turn, moving in to service
their neighbours. With the huge
Central Plains Water irrigation
scheme, currently under construction, predicted to add many
millions of dollars in added production and ongoing food industry business activity, Izone could
not be better positioned for businesses or investors looking to put
first inland port. Izone’s Stage 7
land, now available for purchase,
includes sections on the Metroport boundary.
So the stage is set for a further
round of investment and growth,
offering excellent prospects for
businesses and investors looking
to purchase commercial property
in Canterbury.
On The Right
Track, Right Now.
Prime locations with tailored
boundaries next to Port of Tauranga’s
Metroport freight forwarding hub.
• Izone: New Zealand’s largest industrial development.
• Selwyn: New Zealand’s fastest growing
regional economy.
Land sale or leaseback options
available now www.izone.org.nz or
phone 0800 569 455
• Port Of Tauranga: New Zealand’s most successful
port operator.
• Metroport Canterbury: Canterbury’s only
operational inland port.
• No developers contribution fees and
free from construction ties.
SDC27921_NBR 26x4
Secure your position
portside today.