Upbeat report on busy Hawkes Bay commercial property market
An aerial photo of Napier - the city’s Hospital Hill in the foreground and the port and industrial area below to the left.
In Hawkes Bay good-quality property investments continue to be keenly-sought and prime property values are generally improved says a property market report compiled by Hawkes Bay based Turley & Co.
“Hastings-Napier has seen significant city centres renewal 2011-14, which in the long-term very positive for Hawke’s Bay commercial property, plus major new industrial developments,” the report says.
“However construction cost inflation is well underway including a shortening builder capacity that will reset - at even higher levels - new building costs with valuation effects for built property.”
The report also warns that “dairy sector returns uncertainty is a current risk factor for New Zealand” and rents will ultimately be influenced by construction costs inflation.
“New building stock prices will lead and ultimately bolster some existing premises values and a handful of exceptional Hawkes Bay location retail premises are experiencing minor rental increases”.
Most commercial-industrial land values remain considerably off their peak and for the most part continue to moderate or are now static - with a few exceptions.
Turley & Co says trends for Hawkes Bay commercial and industrial property could be expected to improve – “albeit with some ongoing lag as usually applies”.
“The lag has been longer than expected for most Hawke’s Bay commercial-industrial property,” the report says.
Plethora of property development
Turley & Co says Hastings-Napier benefited over 2011-13 from ongoing commercial property development with significant inner-city renewal and for Napier readjustment of the CBD outer core commercial precincts with Dickens St, Hastings St and Marine Parade forming the new boundaries.
There was additionally significant Napier and Hastings new industrial development over this period.
Hastings activity included significant Large Format Retail development (The Park) and new developments for Freedom Furniture, and for Ministry of Social Development offices, plus the former Power Board building and former Mitre 10 Mega redevelopments along with new offices in Karamu Rd.
Restaurant Brands built a Carl’s Jr. fast food restaurant in 2013 on the corner of Heretaunga St West and Nelson St (former Kelt held land). “This property we understand was sold by sale and leaseback at 6.71 per cent yield mid-2014.”
In the Omahu Rd area there were industrial developments for NZ Frost Fans and Manchester Street McLaren Stainless and others.
The report says the precursor to most activity evident in Napier, was the Farmer’s mid-2013 CBD relocation to Hastings St with Marine Parade frontage. The Paxies redevelopment closely followed producing 4-5 small retail units with council thoroughfare link to Marine Parade.
Also last year Crown agencies and other private firms consolidated into refurbished and re-strengthened Station Street offices.
The structural upgrade of 3-storey Dunvegan House and the redevelopment of the former Cosmopolitan Club mid-rise offices at new precedent rents (part occupied), both concluded in 2014.
The Raphael’s building on Hastings Street was purchased by adjoining owners and demolished November 2013 ready for proposed development.
Mackerseys completed a new office development in Waghorne St, Ahuriri with anchor tenant Crombie Lockwood moving in October 2013. A further high-spec two-storey office development in Wright St, Ahuriri, was recently granted resource consent and is earmarked for completion mid-2015 and the Tremain family completed a modern office development in Taradale.
LowMac in late 2013 gained resource consent for a reported $20 million split level retail and five-star boutique hotel complex at The Tavern site in Havelock North.
Turley & Co says it was widely known in late 2013 that Progressive Enterprises were seeking land in Havelock North to develop a Countdown supermarket presumably to contest with Foodstuffs’ proposed New World supermarket site on land acquired on Havelock Road in June 2013.
LowMac developed a split level retail office complex on Porter Drive, being part tenanted. This became a strong future location, intercepting traffic between the village centre and the planned New World site if it is developed.
There was a significant new industrial development for Napier at the airport for ABB and in Severn St, Napier, other major industrial premises were recently completed including for Gough Cat and HT Engineering.
One of the most recent proposed developments is for a large format retail park on 17 ha Crown-owned land at Prebensen Drive. Euro City as head lessee, plan to occupy 1 ha adjacent to Mitre 10 Mega. “Bunnings Warehouse and other big box retailers have reportedly expressed interest.”
The former The Warehouse site is now partially redeveloped and tenanted by The Clearance Shed as is a site in Queen Street West opposite Countdown – now a new showroom-retail development for Reduced to Clear.
The former Farmers site on the corner Market St and Queen Street is to be redeveloped for Kiwibank and Hastings Countdown has been acquired by a local developer. The developer has also acquired the neighbouring RSA building (reportedly for $3.3 million), as Countdown wishes to expand. This would assist the heart of Hastings.
The report says the Napier CBD continues to be embroiled in office and retail redevelopment. The former three-storey Caledonian Hotel on a corner site, was redeveloped to split-level retail premises anchored by Kathmandu and completed in mid-2014. Across the road, NZ Post/Kiwibank moved back into the redeveloped Central Post Office building along with Vodafone that is occupying newly established corner frontage to the Dickens St public car park. “Much of the building is currently vacant.”
The former State Theatre on a corner site at Dalton St and Dickens St is being partly demolished. “Angor Wat Bakery and Premier Hairdressing College are understood to be the new occupiers once redevelopment is completed later this year.”
The Williams Building (between Paxies and Cosy Club) is also earmarked for further retail redevelopment.
Fulton Hogan and Bridgestone in 2014 relocated to brand new facilities in Napier’s Severn Street industrial precinct.
Nearby in Ahuriri, Big Save Furniture have outgrown their existing premises and are shifting into the former Bunnings Warehouse premises on the corner of Ford and Pandora Roads. The developer-landlord has proposed an additional large format retail building to accompany the Big Save store by the end of 2014.
Turley & Co says 2013-14 has seen considerable Hawke’s Bay industrial development activity with the continual supply of proposed developments generally throwing the weight of the market to tenants.