How hot demand for New Zealand food is influencing cold property choices

How hot demand for New Zealand food is influencing cold property choices

Industrial – Workplace September 2017

Space Race

There’s been a surge of interest in the leasing of food grade premises and in particular, cold storage facilities, around the country in recent times and in some areas, there’s pent up demand thanks to tight supply.

If you’re looking to take your food business to another level – maybe even sussing out international markets – then you’ll likely need to get your landlord onboard to retrofit your existing leased premises, or start the search for a bigger or better-equipped property.

You will probably have competition, though, so act quickly if you spot something that would suit your business model.

A recent lease transaction in South Auckland saw a food processing building of around 2,000m2 snapped up before it had barely touched the sides of the market. It could have been leased multiple times over such is the scarcity of prime cold storage property available in the Auckland region.

As domestic and overseas demand for New Zealand food product escalates, so too does the demand for industrial property that’s fit-for-purpose, close to major transport routes and ports, and close to a good labour pool.

The continuing rise in popularity of home food delivery services – be that supermarket online orders being taken door-to-door, organic fruit and vegetables boxes delivered to homes or workplaces, or the weekly “meal box” type offerings – means the race is on for suppliers and producers to find well-located bases for their businesses.

And that’s before we consider international export markets. Hello New Zealand wine, craft beer and Manuka honey?

New Zealand’s free trade agreement with China and changing dynamics within the food, beverage and health sectors in Asian markets, is driving demand for products produced here.

China’s rising disposable incomes, increased urbanisation, access to online portals, more adventurous palates keen to try Western food and the ever-growing interest in New Zealand honey and baby milk formulas, means that there are heaps of fresh opportunities for processed food-related products.

Retro-fitting an existing industrial property to bring it up to food-grade standards can be costly, time-consuming and is definitely bureaucratic red-tape territory to comply with hygiene and health and safety thresholds.

However, if you are currently leasing a building that has capacity to absorb your growing production and it is in a good location in terms of access and distribution, then your landlord could well be onboard with upgrading facilities – given the solid fundamentals of the local and international demand for food and beverage and health products.

There are some new food-grade developments coming on stream in parts of the country, so keep in touch with your local industrial property agent to see if they have some intel’ that could keep you ahead of the curve.

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