Better-connected zones in demand as market heats up

By Colin Taylor

Transport connections are also one of the most important factors for logistics companies, like this warehouse on Pavilion Drive.
Transport connections are also one of the most important factors for logistics companies, like this warehouse on Pavilion Drive.

Auckland's industrial property sector is heating up causing many logistics businesses to review their locations to support growth and allow for expanded operations, says Bruce Catley, managing director of CBRE's South Auckland office.

"Last year saw the largest amount of new industrial space come on to the market and be absorbed in three years, which is a sign of the strong demand and continuing growth," Catley says.

"We are seeing increasing development in the Mangere airport precinct, East Tamaki, Mt Wellington and Wiri with occupiers viewing these areas as the top four industrial precincts for the future due to their better transport infrastructure.

"As a result we are seeing large users shifting to these precincts from some of the more traditional industrial areas like Mt Wellington and Penrose."

Catley says timing, quality and location are key factors for logistics companies to consider when relocating.

"Transport connections are also one of the most important factors for logistics companies so locations with excellent port and motorway access are obvious choices to look for.

"In addition to the Waterview Connection linking the south, west and upper harbour areas, the AMETI [Auckland-Manukau Eastern Transport Initiative] project is going a long way to connect Auckland's southern and eastern suburbs with the airport precinct, which will improve strategic transport links and be of huge benefit to several key industrial areas."

Catley says the question of whether to relocate into an existing building or commission a new build facility depends on the individual businesses and their requirements:

"Some business will benefit from a purpose-built facility if they are looking to take advantage of increased cubic capacity, higher stud height, or if they have specific power or trucking considerations that may not work in the available vacant options."

He says timing is an important element that is often not properly considered before relocating.

"Often the process of sourcing a new property can take longer than anticipated.

"Where possible CBRE recommends starting the process at least 18 months before a prospective relocation. But practically, businesses should ideally evaluate their requirements 24 months out from the event.

"Having a clear property strategy can accelerate business growth, and in a competitive market, with a handful of large developers and landlords, it is important to ensure there is time to evaluate all options when considering relocation."

Catley says a business contemplating a relocation should consider the early appointment of an experienced agent to ensure maximum market coverage in a time frame that may work for the business.

He also forecasts that prime industrial rents will increase this year due to the high demand for good quality buildings, low vacancy in the A grade segment and the current positive business sentiment.

"For those reasons the owner occupier market has continued to be exceptionally strong but, akin with the lack of quality existing facilities, it is now challenging to secure freehold development sites of 1.5ha and above in a tightly held industrial market."

Where sites are available in favoured precincts, they sell for more than $300 a square metre, he says.

- NZ Herald

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