The value of commercial and industrial property at Tauranga remains at peak levels, even following the sector's three-year capital value "bull run".
So says Bayleys Tauranga commercial manager, Mark Walton, who expects the sector — comprising industrial, retail, warehousing and office property — to maintain solid growth till at least 2020.
"As part of the 'Golden Triangle (Auckland, Hamilton and Tauranga) the city's underlying economy is strong, with no no signs of easing", Walton says.
"This is despite the fact that social infrastructure — including the property sector — has been forced to 'play catch-up' with population growth."
Projects including Tauranga Crossing, Tauriko, and the remodelling and regeneration of the CBD, including the new Farmers outlet and adjacent real estate, have continued to drip-feed floor space into the market over the coming two years.
"Meanwhile, the horticultural sector — particularly kiwifruit and avocado production — is buoyant after record crop value yields, and subsequently land values are at peak.
"With higher rural revenues feeding through to bottom lines, we're tracking more interest in pure commercial property from orchardists and farmers sitting on high equity levels with their properties.
"To add diversity to their portfolios they are looking at investing 'in town'," says Walton.
Commercial property yields are at all-time lows — getting down to around the 5 per cent range.
Examples of this include sale mid last year of 168 Devonport Rd, comprising Asian supermarket and gymnasium tenancies, which changed hands for $2.95m for a yield of 4.9 per cent. Also, the brokering of the Ridge Plaza multi-tenanted retail complex in Jude Place, Bethlehem, selling at the end-of-last-year for $3.05m, at 5.1 per cent yield.
"In manufacturing and warehousing sectors, we've seen firms such as Centesi Furniture and NZL Group take on bigger premises to handle their increased activities and operations.
"And in retailing brands such as Rodd & Gunn and Max have both taken on more floorspace in the bigger and brighter Bayfair Mall."
Walton says commercial property developers were active in the Tauranga real estate market all last year.
This group's acquisitions included purchase of 837sq m of bare land at Tauriko Business Estate (for $448 per sq m), through to a 2755sq m motel and single-level commercial building property in Harrington St — zoned for urban renewal up to 49m high.
"Commercial construction in the city is experiencing unprecedented growth.
"Of the $337m of non-residential consents in the 12 months to September: $117m was for retail buildings, $82m was for industrial spaces and $71m was for offices," he says.
Walton says 2018 was a record year for commercial property sales in Tauranga — with some $194m recorded.
In the auction room, Bayleys Tauranga recorded a 73 per cent clearance rate on commercial properties over the second half of the year.
"There is a groundswell of sentiment coming through now from a growing number of our clients looking to cash out at the current peak level before the market heads into a period what we believe will be of flatline activity.
"This is as good as it's going to get for a while, so vendors thinking about cashing up at the top of the market should get out now," Walton says.
He expects significant ongoing demand from the investment market.
"This will be both for new-build stock and existing income-producing-premises, with established tenancies on long leases. So there is still an appetite out there for good real estate assets."
With most buyers and sellers winding down over Christmas and New Year, Walton expects market activity to spark back into action midway through February. Several new listing campaigns are already in the pipeline.