Opportunity as vacancies, rates fall
Hamilton’s plunging industrial vacancy coupled with historically low interest rates have combined to create a compelling sales pitch for an industrial property at 90 Duke St, Frankton.
Bayleys commercial sales brokers Rebecca Bruce and Jordan Metcalfe expect significant interest from owner-occupiers due to the scarcity of well-presented modern industrial spaces.
“Low interest rates mean many commercial property owners are holding on to their investments, making it difficult for potential owneroccupiers to find premises or expand,” Metcalfe said. He expects commercial investors to check out the property for the same reasons.
The two-year-old, single-level 558sq m building on 1545sq m of land is being sold at auction on Thursday, October 31, with vacant possession, meaning a new owner-occupier can quickly be trading. The vendor recently relocated to another site.
Bruce described the property as an extremely desirable asset. It was built in 2017 to new codes and standards and is in the key industrial area of Frankton, close to Hamilton's central business district and minutes from State Highway 1.
The building features a high-spec office and amenities, a 5.8m stud and four 6m-wide roller doors. The 1545sq m incorporates a concrete yard.
The zoning is industrial, but the district plan includes provision for commercial activity within the industrial environment.
Hamilton's booming economy and increasing population bodes well for large-scale growth, Bruce said.
The tightly held industrial property scene is evident in the commercial vacancy level in Hamilton falling from 2.8 per cent a year ago to 2.3 per cent, with some researchers identifying the industrial vacancy at 1.2 per cent, the lowest on record. This is despite a sharp uplift in development activity.
For example, building consents issued for industrial premises in the area that encompasses Auckland, Waikato and Bay of Plenty rose to nearly 776,000sq m over the year to April 2019, up from 600,000sq m a year earlier, and nearly twice the 2017 April year total of 395,000sq m.
Growth has been driven by Hamilton industrial businesses expanding, as well as companies relocating from other centres and taking advantage of transport improvements such as the Te Rapa Expressway.
A Bayleys Research Golden Triangle report says the $2 billion Waikato Expressway, yet to be completed, is the most significant infrastructure project in the area.
It will provide 102km of four-lane highway beginning south of Cambridge, through Hamilton and on to the Bombay Hills where it will link with the Southern Motorway.
The report also reveals that rising industrial rentals range from $80sq m to $150/sq m for warehouses, and $180-$200/sq m for office/showroom rentals.
On the investment front, yields range between 5 per cent to 7.5 per cent and are forecast to firm. The value of land is between $250-$350sq m and described as being in short supply.
The Golden Triangle report says the Waikato region has the fourth highest average annual income in New Zealand. It has also experienced comparatively high population growth and migration from nearby regions during the past five years.
The report highlights the area’s diversity in population growth, industry types, and economic growth across the region, with Hamilton City, Waipa and Waikato districts often performing better than other areas on key indicators.
Waikato has a strong agricultural and forestry base and significant geothermal resources. Its upper North Island location makes it a nationally significant juncture for freight and transport including good infrastructure, and research and education centres.