Tauranga investor confidence soars

Element IMF commercial manager Rachel Emerson says investor confidence is one of the reasons behind growth at the Tauriko Business Estate. Photo / File

Investor confidence in Tauranga is the third highest in the country behind Auckland and Queenstown as the region displays "the perfect storm" of factors to support the growth of its industrial sector, a new report says.

Several elements are working together to ensure the continued success of industry in the region and improvement of consumer confidence, according to the report by Colliers International Industrial Research.

"The area has one of the highest proportions of manufacturing employees in the country which provides significant demand for older and more established industrial premises," it said. "The port and major arterial transport networks feed the expansion for transport and storage requirements, particularly for warehousing and yard space. The region also continues to enjoy some of the highest population growth rates in the country, and with it comes the demand for industrial space to service construction activity."

The report noted rising pressure to increase rent for high-quality industrial space above the current $90 to $100sq/m and the low interest rate was continuing to encourage business owners to purchase or build their own premises which was particularly noticeable at the Tauriko Business Estate.

Rachel Emerson, commercial manager of Tauriko management company Element IMF, said 15 buildings were under construction at the estate, the most there had ever been.

She agreed low interest rates were one aspect of the current climate which was encouraging business owners to become their own landlords because the mortgage was as cheap as paying rent.

"You're getting land at Tauriko cheaper than pre-recession, you've got interest rates at fantastic levels and construction companies are very competitive."

As the country's economy continued to recover from the recession people were more confident, she said.

"Some people fared okay through it but were too cautious to do anything. Other guys are up and away and are just too constrained where they are now."

Priority One chief executive Andrew Coker said the report was no surprise.

"We are definitely seeing real growth in investor confidence at several levels - the Port of Tauranga is investing more than $150 million over the next three years to accommodate the next generation of container vessels, which is a real investment in the future here and will in itself see more export and import/distribution businesses locate in the Western Bay of Plenty.

"Similarly, the investment by TrustPower in their office development reflects real and long-term confidence in our city centre. At another level, we're seeing strong growth in investment in start-up businesses by locally based Enterprise Angels, with 45 per cent of their total investments now in local businesses."

Tauranga Chamber of Commerce interim chief executive Toni Palmer said the situation was typical of financial recovery as new businesses opened and others upsized.

"Many landlords withheld rent increases during the global financial crisis as vacant space gave tenants alternatives. New buildings and space will also give tenants options and may mitigate potential increases in rent."