Primary industries ‘cream it’
Abullish outlook and record returns from primary produce — along with the growth of regional food belts — is underpinning opportunities in the industrial property sector. A Situation and Outlook for Primary Industries report by the Ministry for Primary Industries predicts that export returns from farms, orchards, forests and fishing is headed for a record of $42.2 billion.
The national director for Bayleys’ industrial and logistics division, Scott Campbell, says significant capital investment into the manufacturing and logistics sectors has bolstered demand for industrial property.
“New Zealand’s industrial property sector is leveraging increased demand for packing, processing and cold storage facilities and warehousing sites,” Campbell says.
“Concurrently, there is increasing demand from tenancies whose core business activity in the primary production sector is in the likes of logistics, or research and development. With primary export activities and revenues forecast to maintain their stellar run for quite some years to come, the opportunities for New Zealand’s industrial property sector to continue to ‘piggy-back’ off land-based production are substantial.”
Campbell is encouraged that industrial property is prospering in the provinces, compared big city growth more reliant on population-driven commerce. Bayleys’ research confirms substantial commercial property expansion in regions with high levels of primary production growth:
Wine Marlborough general manager Marcus Pickens says multiple niche segments of the region’s commercial property sector had benefited from the strong performance of the viticulture and winery sectors. These include packing premises, large bonded warehouses, industrial buildings housing tenants involved in steel fabrication and engineering activities, and even residential construction.
“There’s huge scope for industrial investment and we’re seeing companies like WineWorks and the Bottling Company, for example staging their continued business expansion on the back of wine industry growth paths,” Pickens says.
The general manager of stainless steel design and manufacturing firm Crown Sheetmetal, which specialises in steel vessels for the wine, dairy and food processing industries, Crichton Purdie, acknowledges the Marlborough-based operation is “growing nicely” on the back of the wine sector.
“Crown has acquired a small local fabrication business and taken over the facility of wine tank manufacturer, Taylors Engineering. We also grew our business after earthquake events, when repairs and strengthening of tanks was paramount,” he says.
“Our growth is directly related to the growth of the Marlborough wine industry. As winery interests expand, so does the investment in winery infrastructure.”
Meanwhile, primary sector-focused business Wakatu¯ Incorporation has a diverse operations and commercial property portfolio which includes processing and packaging facilities, vineyards, marine farms, orchards, residential, retail and industrial developments, and office buildings.
Its property interests span Marlborough, Nelson and Tasman. Iain Sheves, the general manager of Wakatu¯’s property arm, Whenua, says it leased industrial facilities, horticulture and water space to its sister firm, food and beverage business Kono, which also leases industrial facilities from other parties. Kono grows, harvests and processes mussels at purpose-built building on the Havelock marina, which it leases from Port Marlborough.
“As (the Wakatu¯ Incorporation) businesses mature, they see opportunities for collaboration and growth through investment in plant and equipment, rather than being constrained by owning property,” Shelves explains. “Most of our current business activities require space.”
Hawke’s Bay is often referred to as the country’s fruit bowl, with pip and stonefruit industries, and more latterly wine production, underpinning economic performance there.
The region’s industrial property response to the prosperous horticultural sector has largely been through the construction and expansion of coolstore, packhouse and logistics developments.
The emerging Tomoana Food Hub industrial precinct in Hastings is next door to industry-giant Heinz Watties’ processing plant, and close to other significant in food production and processing.
Occupying a 16ha site which is zoned Industrial 7, Tomoana Food Hub has easy access to the Port of Napier and Tomoana Warehousing Ltd offers on-site third party logistics and overflow storage services to tenants.
Development manager Logan Taylor says the land-holding/development company is working closely with the region’s councils to further promote its food innovation hub — a single, multi-tenanted building built specifically to enhance interactions between tenants of small and start-up businesses in the food, beverage and agri-tech space.
“Our challenge is identifying small food businesses who have outgrown their existing (industrial) premises — often in old retrofitted industrial buildings which don’t quite meet today’s standards — and getting them to take the leap into the hub,” he says.
The Christchurch-fringe township of Rolleston has become a hub for processing and distribution in Canterbury’s dairy sector — with producers Fonterra, Synlait and Westland Milk Products all consolidating a presence there because of the industrial property and transport infrastructure available.
Westland Milk Products has value-add
processing plants on both sides of the Southern Alps — infant formula dryers in Hokitika, and an ultra-high temperature processing (UHT) plant in Rolleston.
The company has 7.237ha in Rolleston’s Izone Industrial Park. Housed on the site are its multiple processing activities — including a water-removal plant, warehousing, UHT plant, tanker reception and washing area, rail siding, and offices.
Westland is also a partner in Pure Nutrition Ltd, a joint venture with an infant formula canning company Ausnutria, which occupies a 2.5ha Izone site.
Westland chief executive officer, Toni Brendish, says the company took into account a number of key factors when considering where to locate its UHT plant.
“Westland considered milk availability, obtainability of space to build the plant, closeness to transportation and warehousing facilities and distribution networks,” says Brendish.
To future-proof its Canterbury operations, Westland owns an area of undeveloped land it can expand on at Rolleston.
Elsewhere in Rolleston, Timaruheadquartered cold storage venue provider Coolpak has expanded the company’s operations into the precinct — occupying a threehectare site.
Coolpak business development manager Mark Exton says the company has enough room within its landholding and could mirror expansion of the current facility within 24 months.