Roading projects drive growth in city’s north
Investment in large-scale roading projects linking the Northland region to greater Auckland makes the northern corridor more attractive for large occupiers.
In its recent Commercial Market Update for the Hibiscus Coast and Warkworth for the second half of 2022, Ankur Dakwale, analyst for Bayleys Insights, Data and Consulting, says industrial markets across the country are facing tight leasing conditions, with demand driving growth in emerging markets.
“Strong demand for warehousing to support e-commerce and stockpiling from businesses to mitigate supply chain issues have snowballed industrial rental rates in most locations.
“In addition, roading projects which increase transport efficiency are enabling occupiers to look farther afield for suitable locations,” he says.
In Auckland’s Rodney district, roading projects including Ara Tu¯hono (the new Puhoi to Warkworth highway), Penlink (SH1 to Whangapara¯oa) and the Matakana Link (SH1 to Matakana Rd) are having a significant impact on accessibility to the region, with occupiers taking notice.
Ben Clare, director of Bayleys in the North Commercial, says his team concluded several high-value transactions in 2022, with purchasers attracted by returns and the availability of assets in the north compared with the broader Auckland market.
Recent transactions include:
2045sq m industrial premises at 56 Forge Rd, Silverdale, sold for $6.125 million at a
5.09 per cent yield.
1796sq m industrial premises at 62 Forge Rd sold for $5.685 million at a 4.25 per cent yield.
Neighbourhood retail premises of 412sq m at 38 Matakana Valley Rd, Matakana, sold for $4.5 million at a 2.47 per cent yield.
Large residential development site totalling 8.32ha at 51 Alnwick St, Warkworth, sold for $13 million.
Clare notes good sales activity is driven by a scarcity of developable land, with businesses planning a strategic response to the growth in e-commerce by moving operations to fringe districts where availability is slightly less constricted.
“While there has been some yield softening across the Hibiscus Coast and Rodney in response to increasing interest rates, evidence has shown that industrial assets in good locations with strong tenant covenants are transacting at yields averaging between
4.5 and 5.5 per cent.
“Good-quality assets remain resilient due to the weight of capital seeking performing investments. However, sale processes are taking longer due to differences in price expectations between vendors and purchasers.
“Despite this, historically low vacancy rates across the Auckland region continue to encourage occupiers and investors north, which underpins currently strong levels of demand,” Clare says.
Chris Blair, director of Bayleys in the North Commercial, says master-planned communities across the Rodney district drive demand for the commercial and industrial sectors.
He points to projects, including the Village Rise in Matakana, Mangawhai Central in Mangawhai and Milldale, attracting new residents and vibrancy to the region.
“Residential values across the Rodney district have outperformed the Auckland region and the national trend, with larger, master-planned communities supporting local prosperity.
“As these communities come online, operators want to capture skilled staff by securing higher quality offices and attractive working environments for their teams.
“Modern office spaces have low vacancies in most locations as tenants continue to attract workers back to the office after the work-from-home phenomenon.
“Seismic protection is driving relocation in higher-risk locations, whereas older and more dated buildings are less competitive, offering an add-value proposition for skilled investors.
“Research indicates that dated offices have greater availability across the region, netting between $220 and $250 per sq m per annum with benchmark yields between 5.9 and 6.3 per cent.
“Modern offices return between $280 and $310 per sq m net per annum with a benchmark yield of between 5.4 and 5.9 per cent, and scarce availability continues to drive tight supply.”
While Rodney’s commercial and industrial market has remained largely resilient, Blair says continued growth in e-commerce will fuel the urban logistics component of the market.
In addition, consumers’ delivery expectations will drive demand for local warehouses to meet fulfilment requirements.
“Large-scale investment in state-of-theart distribution centres is yet to come north, but as growth nodes open and vital roading infrastructure proceeds, we are looking ahead with all signs pointing to positive growth for the region,” he says.
Bayleys’ Commercial Market Update, produced by its Insights, Data and Consulting team, provides data to support themes currently impacting the sector.