This shift has created more demand for high-stud warehouses with large yards, near major transport routes
14 August 07
Research says Rolleston has lowest priced industrial land in Canterbury
New research from Colliers International suggests that Rolleston is the best-priced area in Canterbury for those considering investing in industrial land. The figures were published in an article in the Christchurch Press (see below). The article also talks about the dearth of available land in the city and what this will mean to future investors and also where they predict the development money will come from.
The Press, Commercial Property, Tuesday August 14, 2007
Industrial land prices in some parts of Christchurch have doubled in four years, new research has found. Liz McDonald reports.
Developers and commercial real estate agents in Christchurch have been complaining about a shortage of industrially zoned land for several years.
And now it seems changes in demand brought about by economic factors and by institutional owners holding on to their assets is making things worse.
While exporters and manufacturers are closing or cutting back their New Zealand operations because of pressures caused by the Kiwi dollar and offshore competition, the logistics sector, which needs larger premises, is expanding.
This shift has created more demand for high-stud warehouses with large yards, near major transport routes.
This means bigger properties, usually in the city’s outer western suburbs where the land is cheaper and access in and out of town is easier. It means more pressure on what land is available and higher prices as a result.
Research just out from Colliers International Christchurch shows what impact this is having on the industrial property sector.
The research describes the supply of industrial land in the city as “very limited”, with most of what is available contained in blocks of over two hectares.
Gary Seear, an industrial specialist with Colliers, says developers are having to pay a premium for the land in what has become a competition with owner/occupiers.
“The limited supply, along with the delay in getting land rezoned and available for sale, will affect take-up in the next few years providing strong impetus for continued increases in values.” Seear says.
Colliers’ report found that strong investor appetites are pushing up prices, and yields are down and capital values up as the supply of properties dwindles.
It says that much of the recent interest in the Christchurch market is from Australian funds, which have “substantial new money” allocated to property.
This is contributing to the shortage, as institutional investors, and especially listed property trusts, like to retain properties long term.
Seear says the large-scale arrival of the institutions has fundamentally changed the market in terms of the number of properties being traded.
However, he says that while New Zealand’s prime assets still look relatively cheap internationally, the country’s interest charges and the high dollar were dampening overseas buyers’ enthusiasm.
The report found that values were up strongly in many areas of Christchurch particularly Woolston, Middleton, Sockburn and Hornby.
| SUBURB | 2003/04 | 2006 | 2007 |
| Sydneham | $190 | $270 | $300 |
| Bromley | $65 | $120 | $120 |
| Woolston | $65 | $140 | $150 |
| Sockburn | $120 | $160- $190 | $200 |
| Middleton | $130 | $180- $200 | $180- $200 |
| Hornby | $90 | $160- $200 | $180- $200 |
| Rolleston | $35 | $65 | $80- $110 |
Values in some parts of town were twice what they were in 2003 and 2004, and in nearby Rolleston, where the Selwyn District Council has developed the Izone Hub business park, they have trebled.
The research also reveals that the lack of investment-grade stock has sparked a trend to off-market sales.
The higher values and low vacancies were also driving up rental demand and pushing up rents, Colliers’ report found.
The gap between rents for new and existing warehouses was closing, with tenants paying $80 to $100 a square metre for a large warehouse with a seven metre stud, and $120 and $170 a square metre for attached office space.
With available vacant industrial land held by large developers wanting to develop it as land and building packages, it was getting harder for owner/occupiers to get their own properties.
Colliers expects an increase in “brownfield” redevelopments within established industrial areas, and that some industrial users will look out of the city to areas such as Rolleston and Belfast for property.
It expects some of the effects of the land shortage to be delayed, which would mean more increases in industrial property values ahead.