Growing demand from owner occupiers for industrial property
Encouraged by low lending interest rates but disenchanted with correspondingly low deposit rates, investors are increasingly turning to the industrial sector, which continues to be a star performer throughout the country.
Sam Staite, director of the industrial division at Colliers International in Christchurch, says the owner-occupier market is particularly bullish.
“Tenants are realising that they can save serious money by owning rather than leasing and this is the main driver in the owner-occupier market.
“The current interest rates have resulted in a significant increase in demand for existing properties and for land, and we are transacting a huge amount of property.
“Banks are being particularly aggressive in funding proven businesses into their own premises and, with interest rates where they are, the economics simply make sense.”
Staite’s comments are echoed by Nick Maier, general manager of strategic development at Calder Stewart.
“We’re seeing strong investor interest in quality stock. Yields are holding or firming up and there’s a confident view in the long term of the industrial property sector.
“The recent drop in the OCR to one per cent has boosted that even further. We’re noticed a dramatic increase in people looking for good investment stock since that announcement.
“We are also seeing good bank support for the right assets and the right ownership structure. The problem is that it’s really hard to find good very many good assets for sale and there are definitely far more buyers than sellers. Investors seem to be holding back their stock at the moment.”
With that in mind, Staite expects this trend will fuel interest in a prime industrial warehouse at 14 Braeburn Drive in Hornby, one of the highest growth and rapidly evolving industrial areas of Christchurch.
The property has been home to Steel & Tube Holdings Ltd’s reinforcing division for the past 13 years. It is for sale by deadline private treaty, closing September 25, unless sold prior.
“Now surplus to requirements, the property is to be sold with vacant possession. This could represent an opportunity for a business to secure a modern building in a very tightly held location, where few other existing buildings are available.”
Conventional in design, the building is situated on a large freehold parcel of 11,565sq m and features a low ratio of office to warehouse, high stud warehousing with one centre row of columns, two gantry bays with cranes, excellent drive through access and good hardstand lay-down areas.
Staite says: “The Hornby location has matured and improved greatly over the past 10 years with a large amount of new development and refurbishment of older facilities. Hornby continues to be one of the most sought after commercial/ industrial areas in Christchurch.
“The bustling Hornby retail precinct is another lure for investors, coupled with the roading improvements which are a big driver for industrial demand. The upgrade of Halswell Junction Road has greatly improved the flow of traffic and the upcoming opening of the Southern Motorway Stage 2 will be a game changer for traffic heading to Rolleston and beyond.”