New industrial space drops: Survey
Hamilton has nearly two million square metres of occupied industrial space according to the most recent CBRE NAI Harcourts industrial occupancy survey. Around 33,000 sqm was added in the year to December 2020, less than half the 77,000 sqm added in the previous 12-month period, a change in behaviour that can be slated to Covid-19 and business uncertainty, according to NAI Harcourts commercial and industrial consultant Theo de Leeuw.
The annual survey is based on a comprehensive building-bybuilding analysis of properties within the industrial-zoned areas of Te Rapa, Frankton, and, for the first time, Hamilton Airport’s Titanium Park industrial area.
The survey of more than 2500 properties showed an increase of
33,500 sqm in occupied space in
2020. And new developments coming along total 70,000 sqm with work under way in all areas except Te Rapa South.
The top nine developments total around 63,000 sqm, with more than half – 33,000 – taken up in the giant Trade Depot under construction on the corner of Raynes and Sharpe roads at Rukuhia, due to open in 2022.
De Leeuw said vacancy rates were very low, around 1.3 per cent of all industrial floor space, which is up slightly from 1 per cent in 2019 – the lowest vacancy rate on record. For owners, the chance of having an empty building remained low.
‘‘At around 1 per cent vacancy, if someone vacates, there’s plenty of people keen to take the space. It is important to our business when clients are assessing the risks and making decisions around buying property as an industrial investment, that they have the ability to re-lease property and not have it sitting empty. Investors will always ask what risks they face in re-tenanting.’’
De Leeuw said it was becoming difficult to find space and there was a shortage of options.
‘‘We have seen enquiry in the 200-700 sqm and 2000-3000 sqm ranges – bigger floor plates resulting from design and build. This is great for the city as it shows more construction activity. Some of the demand is coming from outside Hamilton and some from businesses expanding within the city. One thing is the supply and cost of land for new builds; land options are very limited. The thing that sticks out for me is the strong interest in Frankton, in particular the central area around the CBD and rail line from businesses in trade supply including Napa, flooring, safety and apparel businesses, which used 2020 to reposition themselves.’’
Information from the CBRE survey showed two large development projects were completed in Frankton. One was a replacement building for painting-decorating business Cantec Services, which moved across Norton Rd into new 1650 sqm premises. ‘‘There has also been a significant increase in the numbers of smaller developments with a pretty even spread of tenants including an increase in logistics-focused businesses as more people work online.’’
De Leeuw said the supply of land for new builds was limited, but new businesses continued to come into the city from Auckland as land prices in Hamilton were still about 10 per cent cheaper than Auckland or Tauranga.
There had been a significant take-up of land by owneroccupiers and developers, resulting in a large drop in industrial land capacity, signalling more builds to come.