The operators of Greenmeadows New World supermarket looked to have blocked rival chain Countdown's development across the road from it by buying land in the proposed development area for more than twice its rating valuation. The operators paid $2 million for a 1990sq m property with a rating valuation of $980,000.
Countdown later abandoned an attempt to aggregate land in nearby Taradale.
The report said the jockeying for sites was symptomatic of a strengthening property market despite widespread commercial-industrial development, reflecting strong interest from out-of-town investors in a booming Hawke's Bay economy.
It said Hawke's Bay had low exposure to the dairy industry slump while tradition industries such as tourism, pipfruit, wine and cropping were enjoying good prices and volumes.
Competition from overseas-based investors and New Zealand syndicates was driving up prices as continuing low interest rates made lower capital returns attractive.
The Warehouse Hastings is currently for sale with an asking price 41.8 per cent more than its 2011 sale at $13.4 million, by Australian developers Charter Hall. The 2011 purchase gave an 8.25 per cent yield but the current asking price of $19 million would yield the new owner 6 per cent.
"After 7-8 years of hard toil, Hawke's Bay's economy is performing strongly," the report said.
"Booming apple and viticulture industries have insulated the province from poor dairy performances.
"The positive turnaround in local consumer confidence is at polar opposites from 24 months ago. Jetstar's strategic establishment at Hawke's Bay Airport (alongside Air NZ), is aimed at New Zealand's record tourism growth, as well as increasing provincial travel options.
"Retail spending is up. Hawke's Bay's residential property market is displaying strong capital growth and recently there have been a number of very firm cap rate commercial property investments made.
"The stars are aligned for Hawke's Bay's economy and we expect this to continue for the foreseeable future provided there are no major economic shocks."
Turley & Co director Pat Turley said the market was similar to the pre-GFC surge except for lower interest rates which were fuelling "quite high asset values and low yields".
"The numbers are different but the characteristics are the similar," he said.
"At the peak of the market boom we were getting a 7 per cent cap rate for prime commercial properties and we are now on about 6 per cent."
Colliers International Hawke's Bay director Cam Ward said there was strong interest in Hawke's Bay commercial property and he expected yields to dip below 6 per cent.
"We are now competing on deals with larger cities such as Hamilton and Tauranga, which historically have achieved better yields because they have been perceived to be more desirable, a better location and better capital-growth potential.
"But Hawke's Bay is really starting to perform on a national stage now. We are getting buyer enquiries from down south and Auckland wanting to invest money in Hawke's Bay because of its consistency, growth and potential for sustained future growth."
Residential and commercial property were "intrinsically linked" - strong growth in the residential sector was affecting the commercial market.
"If you have made a $100,000 dollars to $200,000 dollars gain in residential property after 10 years of growth you may be feeling inclined to use that equity and invest it in commercial property, along with some money in the bank.
"People who were living off their investments - their money in the bank - were once getting 6 per cent, then 4 per cent and now would be getting about 2.5 per cent.
"That is really affecting their lifestyle, so now people are deciding is actually more attractive to put money into property where they feel the market is stable, the tenants are good and they obviously get a return. They can go back to the lifestyle they are accustomed to."
Bayleys commercial manager Daniel Moffitt said investors from the property sector were making themselves felt.
"I have a little one I am selling now on Kennedy Rd, with a net $40,000 rent, and I would have had more enquiry about that in the past six days than any other property I have listed," he said.
"Enquiries are coming from all over the country, with a lot of first-time commercial buyers - people that have traditionally bought residential as an investment property are now going into the commercial market.
Commercial property investing was "a totally different mind-set" for purchasers.
"With commercial property if you have the right land and the right buildings then you are effectively buying a lease. You are buying the strength of the tenant, the amount of the lease and the length of the lease.
"That is hard for some of them to grasp. Some refer back to the rateable valuation which generally does not have an impact or is not reflective of what that commercial property is worth."
Turley & Co's weighty report said the industrial sector was increasingly attractive to investors because of simpler construction and lower downstream risk of pricey upgrades.
Office sector new developments meant a disparity in rent levels between the old and the new. Most market activity stemmed from tenants upgrading or seeking better seismic-rated buildings.
"Rents for new buildings are competitive, as rising values give developers greater headroom."
There was "intense" competition for office tenants "who are generally in the box seat".
"This seems set to continue for some time. Face rent is sometimes disguised by an untold leasing inducements back-story."
"The outlook for mid-market and lesser-quality offices is mid-term ordinary, especially if seismic rating is below 65 per cent to 70 per cent of the New Building Standard."
The sector saw considerable development activity over the past three years resulting in rent variation. Rents for new buildings are competitive, as rising values gave developers "greater headroom".
The report said the retail sector was expected to do well in Hastings and Napier for the remainder of 2016 and into 2017, with Napier boosted by increasing tourism. Hastings CBD recorded a 22.5 per cent year-on-year increase in retail spending for the first quarter of 2016.
Havelock North retail remained "particularly strong" with rents increasing and the $25 million Village Exchange retail/hotel development expected to have a positive impact.
Taradale rents dropped from past highs but the number of empty shops decreased from 11 in early 2014 to six in March.
Large-format retail activity remained high in Napier and Hastings "with considerable vacant space backfilled by New Zealand and Australasian retailers".
"These retailers are positioning for competitive advantage and future growth but potentially drawing some consumers away from CBDs."
Mr Ward said while the retail sector appeared to be doing well "it seems to be the survival of the fittest".
"The big guys are coming along pretty well, but across the board retail seems to be pretty competitive at the moment.
"I think the market is looking at that and, from an investment perspective, we once a high street retail shop would have seen a very attractive low yield, now offices or industrial investments are seen as perhaps a more desirable option."
He said tenant demand was a pre-requisite for commercial property investment.
"In our business everything is driven by tenant demand. We have to keep growing tenant demand through infrastructure projects such as the dam and also sustained confidence in the region - people believing they can build their businesses here."
Logan Stone director Frank Spencer said the next year would likely see greater sales volumes, some rental increases for better-located property (which had seen limited, if any, growth over the past eight years) and the possibly of more redevelopment of lower-grade "distressed property".
The Turley report cites mid-market upgradable office supply as "a Hawke's Bay economy competitive advantage".
It said Hawke's Bay's commercial-industrial development activity was widespread.
Ongoing rebuilding and strengthening throughout the commercial property sector provided economic stimulus "and this also affects the buildings supply and redundancy equation".