Aucklanders stuck in lockdown have been eyeing up commercial properties in Tauranga. Photo / NZME
Demand for commercial property in the Bay is soaring, with $9 million of real estate selling under the hammer in one day.
Aucklanders keen for a slice of Tauranga's commercial property market are helping boost sales in the area, industry experts say.
Bayleys Tauranga-based commercial and industrial sales manager Mark Walton said commercial and industrial land values had increased rapidly in the past two years.
Rising costs of construction were putting pressure on commercial rents for new developments so buyers were seeing the value in existing commercial properties that were likely to experience rental growth.
Walton said interest was coming from throughout New Zealand from investors and also owner-occupiers in "growth mode" looking for new premises.
The company was seeing an increasing number of phone bidders from Auckland, Wellington and Hamilton. Earlier this month, four commercial properties in Tauranga sold for nearly $9m at auction in one day.
That included $4m for 51-53 Te Tahi St in Whakatāne, $2.25m for 39 Totara St in Mount Maunganui, $1.6m for 60 8th Ave in Tauranga Central, and $1m for BNZ in Katikati.
A recent report on the "Golden Triangle" of Bay of Plenty, Auckland and Waikato states the three regions are dominating property development activity in New Zealand.
The report, by Bayleys Research, highlighted the major contribution the three provinces made to New Zealand's productivity and GDP.
It showed they accounted for 52.4 per cent of New Zealand's GDP growth in the year to March 2021, and $11.978 billion or 57.12 per cent of the value of all building consents issued.
In the Bay of Plenty, the report showed there was almost a 100 per cent rise in industrial consents to 135,816sq m.
Walton said the 200 hectare Tauriko Business Estate continued to drive much of the industrial building activity in Tauranga - but its success meant the city was rapidly running out of land for future development.
Design-build opportunities were filling up and industrial occupiers would need to act quickly to secure opportunities, he said.
Tauranga and Western Bay of Plenty had a "chronic shortage" of business-zoned land.
"With strong demand from businesses wanting to expand and grow, additional commercial and industrial zoned land is very much required in a rapidly growing and under-pressure Tauranga city."
The Rangiuru Business Park near Te Puke is set to open up about 178ha of land for development in four stages, with the first 35ha scheduled to start construction soon.
It would provide access to the Golden Triangle, with a dedicated interchange connecting it to the Tauranga Eastern Link expressway and a direct rail link also to the Port of Tauranga, Walton said
Ray White Commercial Tauranga managing director Philip Hunt said he sold three properties to Aucklanders when the city was still in level 4 lockdown. The sales remained conditional on the buyers being able to travel out of Auckland to inspect them.
"I've probably had more Aucklanders than normal contact me, and I think it's because they had the time at home."
They were eyeing up small industrial investments, commercial retail investments, and there was a "very good" response to the sale of Fashion Island in Pāpāmoa, he said.
"It's been pleasantly surprising the volume [of interest] from Auckland."
Hunt believed a lot of the interest in Tauranga was driven by frustration with the recent lockdown as tenants looked to relocate to the city.
"We're pretty special here in the Bay. We are in Godzone. We've been operating almost normal business while they have been completely locked down."
Colliers Tauranga managing director Simon Clark said he had not noticed any more interest than usual from Aucklanders in Tauranga's commercial space.
However, he expected a big trend in logistics and manufacturing businesses held up in Auckland's quarantine wanting to diversify out of the big city over time.
"But these are not quick changes. It will take time."
Bayleys national director commercial and industrial national director Ryan Johnson said the strong development activity within the Golden Triangle had been across the property spectrum.
Residential and commercial and industrial buildings were being constructed in "record-breaking volumes", he said.
There had been some short-term slowing in new building activity because of Covid 19 lockdowns, particularly in Auckland.
However, in the medium-to-longer term, the Golden Triangle's dominance as New Zealand's economic powerhouse was expected to continue to gather momentum.
"This will add further impetus to the already high levels of property development and investment activity in the region."
The Bay of Plenty Times has previously reported Aucklanders had been eyeing residential Bay property in lockdown, with some top-end Tauranga listings snapped up sight-unseen.