Go where the money is going

Go where the money is going

Industrial – Workplace January 2018

Space Race

If you have decided that 2018 is the year for some big business decisions – particularly around where you will base your industrial operation in coming years – then it’ll pay to keep a close eye on areas where infrastructural upgrades are underway or planned.

The squeeze is on existing industrial property stock. Traditional industrial areas are experiencing unprecedented low vacancy rates making it hard for businesses to get a foot hold in these popular locations.

However, some forward thinking and decisiveness could see you secure a presence in emerging industrial precincts planned in conjunction with infrastructural improvements across New Zealand.

New industrial property developments will be based handy to evolving population nodes for ease of access to a labour force and close to transport infrastructure.

Well-located industrial property will continue to be sought-after. Any properties that are centrally-located and which tap into transport arterials to optimise efficiencies will be hotly contested in the leasing market.

The mantra is “go where the money is going” – in other words, watch where significant investment is being made into infrastructure and observe where other successful businesses are choosing to locate to.

Most major centres around New Zealand have proactive long-term plans in place to cater for industrial growth. Local councils seem keen to future-proof business growth on the back of strong economies – both in the key markets like the “golden triangle” of Auckland, Hamilton and Tauranga, and also in the regions.

Bayleys industrial manager Scott Campbell says business growth in and around well-located industrial precincts has peaked to levels not seen since pre-Global Financial Crisis days in 2006.

“Just look at Auckland Airport, for example,” he says.

“It’s become a full-on industrial destination with all the big names represented and fierce competition for space.

“Roading improvements and the opening up of large tracts of land have transformed that precinct and demand still outstrips supply.”

Scott Campbell says rental growth of circa 3-4% pa is being noted within well-located areas.

In the Waikato, Future Proof is an initiative which has seen partner councils within Hamilton and the wider Waikato seriously consider how the sub-region should develop into the future – including how it will manage the demand for industrial land and how it plans for infrastructure. The proposed Ruakura inland port in Hamilton will forever change the way the Waikato is perceived as an industrial hub.

In Wellington, the Transmission Gully and Kapiti Expressway projects are driving renewed demand for industrial property in areas that will benefit from the new roads and opening up potential in areas that may have been overlooked prior.

Meanwhile, a proposal from Infrastructure New Zealand to investigate building a new Auckland satellite city around Paerata, north of Pukekohe, is meeting with strong support and this could change the broader Auckland industrial game – again. It says planning for growth at scale around rapid transit will allow a more efficient use of land.

While demand for industrial space from the logistics and distribution sector will increasingly be driven by the growth of e-commerce, food production and niche manufacturing businesses are also driving industrial property demand.

If you’re seriously gearing up for a big business push in coming years, then start identifying where you’d ideally like to be located now and set the cogs of change in motion – before the rest of the sector catches up.

Read more market insights from Workplace

Subscribe to receive the latest commercial news and insights from Bayleys Workplace