‘Boom and bust’ for Hawke’s Bay market
HAWKE’S BAY’S commercial property market is a case of ‘boom or bust’ right now, a new research report says.
The region has seen a building boom of large-scale coolstore and food processing plants off the back of its horticulture, pipfruit and viticulture industries.
However, at the other end of the scale, retail premises in both central Napier and Hastings are ‘‘doing it tough’’, with little good news on the immediate horizon.
Bayleys Research senior analyst Goran Ujdur said economic brightspots included Hawke’s Bay’s primary produce sector exports, which were up 16 per cent in the year to March compared to the same time last year.
The Port of Napier was anticipating total container volume growth to reach 20 per cent over the next year, and building infrastructure in the sector had been bullish.
‘‘The strong influence of primary industry is apparent within the industrial property sector – with the region housing a high proportion of specialist buildings such as packhouses, cold/ coolstores and controlled atmospheric buildings catering for corporate and independent growers.
‘‘Local property developers are supporting this growth – such as Tomoana Food Hub, an industrial food park recently set up over 16 hectares on Heretaunga Plains, with plans to build more than 100,000sqm of factory space designed specifically to meet the needs of food companies.’’
Ujdur said much of the growth was directly attributable to the booming export prices being achieved for the likes of apples and wine.
The apple industry in particular was leading a mini-boom in new storage and processing facilities. Miniature apple grower and marketer Rockit had invested $17 million in a state-of-the-art food packaging facility in Havelock North, ‘‘employing more than 70 people during the harvest season’’.
Simultaneously, a number of wineries had also committed to Whakatu coolstores and similar facilities in Hawke’s Bay serve an everstrengthening part of the local economy. new facilities, including Delegat Group’s landmark 19,000sqm winemaking facility on a 13ha site in Hastings. Villa Maria also had plans to construct a 16,000sqm facility next to Te Awa Winery in the Gimblett Gravels region.
With so much growth, Ujdur said there could well be some softening in rents for older, secondary-grade cool store premises if the supply of newer cool store facilities continued to expand.
Implementation of the Ruataniwha Water storage scheme was critical to keeping up economic momentum for the region’s industrial property sector, with spinoffs estimated to be in the ‘‘tens of millions of dollars’’.
However, in stark contrast, operating conditions for the region’s central-city retail sector were bleak. Suburban ‘big box’ retailing hubs and new mixed-use precincts, such as Ahuriri, were competing with the CBD, and Napier prime retail rents had been flat over the last year.
‘‘Secondary location rents have softened over the past 12 months, and with high vacancy rates persisting in some poorer quality locations, further softening is likely going forward,’’ Ujdur said.
‘‘Both prime and secondary retail rents in Hastings, which are around half the value of those of Napier, have weakened over the last year, and with current vacancy levels continuing to remain soft, further falls are expected.’’
The Hawke’s Bay commercial office and industrial property markets were also fairly subdued, outside of the primary productive sector.
A significant burst of development activity and tenant reshuffling had happened over the 2012-2013 period, Ujdur said.
‘‘This has led to increased vacancies amongst poorer grade commercial premises in both Napier, and to a larger degree, Hastings. This vacancy situation will take time to resolve.
‘‘Activity in Napier’s CBD office leasing market remains very subdued.
‘‘Rents for both officeshowroom and warehouse space has remained relatively flat over the past year, and is expected to remain flat for the next 12 months.
‘‘With plenty of appropriately zoned land available, any increase in demand is readily meet with supply which keeps a natural cap on rental growth.’’