Hart industrial project sets sector rent record
Higher-spec building’s ‘future-proof’ design raising bar, writes Anne Gibson
Anational industrial property rent record has been set on a 1.3ha building project for a Graeme Hart business as part of his $200 million-plus logistics expansion in Auckland.
Fernbrook, owned by Hart’s Rank Group, has achieved $190/sq m annual rent for one nearly-finished building when the previous high was put at $160/sq m.
National construction firm Haydn & Rollett has the roof trusses up on the new storage/office building at 90 Pavilion Drive, Ma¯ngere, backing on to Oruarangi Creek and beside the Villa Maria estate.
Agents are advertising both buildings on the site.
Property For Industry chief executive Simon Woodhams said he had heard a record $190/sq m had been achieved by Hart for one of the Pavilion Drive buildings.
An agent said the first building had been leased for $185/sq m for the industrial areas and $300/sq m for the offices.
“I’m not sure what Hart’s expectations were but his rents are at the top end,” Woodhams said.
The agent said: “Hart is setting new benchmarks in rental levels.”
Real estate agency Colliers previously had the top prime Auckland industrial rent at $160/sq m but experts said the buildings set records for good reasons.
“The rent reflects the additional cubic capacity enabled by such new higherspecification buildings which are futureproofed for storage technology advances and have sophisticated sustainability measures,” one consultant said.
Rising land and construction costs also boosted the rent.
The twin-building project is hitting the market at the right time.
Leasing activity in the logistics/warehouse sectors is at an all-time premium, reflected in the high profitability of listed industrial stocks Goodman Property Trust and Property For Industry, whose share prices are up lately.
In what one sector expert called a “lockdown project”, Hart has considerably expanded his New Zealand business interests lately, spending at least $189m on industrial South Auckland properties. In separate investments, he has spent more adding to his food businesses and buying South Auckland residential.
Hart’s fortune has been estimated at more than $12b.
The Herald reported in November that Fernbrook planned to build two vast new warehouses to cater for the logistical/ storage sector. Those buildings will have a total area of 1.3ha or 13,720sq m.
Construction of those warehouses on a site Hart’s company bought for $21m is now advanced. The buildings have internal heights of 16.75m, allowing more goods to be stored by stacking them higher than inside more traditional lowerstud buildings.
By December, Hart’s Fernbrook aims to finish the 8290sq m warehouse with 420sq m of offices and a 1710 canopy, and a 5200sq m warehouse with 300sq m of offices and an 800sq m canopy.
Fernbrook is owned by Rank Group, which Hart controls as part of his New Zealand interests, which account for only 10 per cent of his overall global business assets.
The street where Hart is developing already has other businesses along it, including Pacific Freight Management, but also other greenfields opportunities.
Attractions for developers and tenants are that the street has good connections to George Bolt Memorial Drive to the airport and is near motorway connections.
Colliers’ first-half Auckland industrial report said overall vacancies fell to a meagre 1.9 per cent in February from 2.2 per cent a year earlier.
“Vacancy rates declined due to ongoing strengthening in demand factors. Online retailing’s continued expansion fuelled the requirement for additional storage, distribution and last-mile delivery facilities. Both residential and commercial development pipelines are increasing and major infrastructure projects are being progressively rolled out which are also adding to demand,” Colliers said.
Last year the Herald reported on Hart buying South Auckland industrial properties in five deals worth $189m. Those purchases were:
• 90 Pavilion Drive on the edge of the Villa Maria Estate, itself about to become a $500m industrial office park
• A 28ha block of land at 31 Prices Rd off Puhinui Rd in the Manukau/wiri area for $94m
• A block of 3.8ha of undeveloped land at 9 Jerry Green St off Roscommon Rd, East Tamaki
•68 Cryers Rd, East Tamaki, developed land in the hub of a commercially highly active zone
•11 Greenmount Drive, East Tamaki, for $18.2m in a deal brokered by agents including from JLL
The Ma¯ngere project is one of the most advanced in terms of new developments by Hart’s businesses.
Bayleys, Savills, JLL, Colliers and others have “for lease” advertisements out on the warehouses, offering naming rights in ads headlined “huge new airport logistics facility”.
Haydn & Rollett has been contracted to achieve practical completion by December, the agents said.
Construction progress indicates the builder is well on target to reach that goal.
The same builders are nearly finished the $100m-plus Costco warehouse at Westgate on the city’s northwestern fringes.
Costco is due to open there either next month or in early September.
The warehouses are targeting a Green Star 5 rating and will offer occupiers road frontage, fully sprinklered high-stud clear span warehouse with high-spec floors, two levels of office/amenities, generous canopy along with a drive-around site and on-site car parking, marketing says.
Experts say Hart could be booking development margins of up to 20 per cent for each new warehouse his companies develop, as well as striking long-term leases of eight to 10 years.
No price is being put on how much the warehouses are being leased for annually.
Colliers’ latest research said average prime net rents for Auckland industrial were a maximum of up to $160/sq m.
Tenants will be paying more than $2m/year to rent Hart’s new warehouses based on those numbers, although early leasing results revealed the higher $185/sq m rate for industrial.
On top of the cashflow is the big increase in value that comes with developing large purpose-built premises in such high demand. That’s where the 20 per cent development margin could come in, experts say.