John Dakin, chief executive, Goodman Property Trust. Photo / supplied
Goodman Property Trust chief executive John Dakin opens up on eldest son Sam competing in this year's Toyko Olympics' track cycling, the year ahead and the need for more infrastructure investment in New Zealand -
Q: How would you describe 2021 for your business?
A: It has been very strong for us. With our focus on urban logistics in Auckland, the tailwinds of e-commerce and supply chain disruption have led to record warehouse space demand. This structural shift and unprecedented investor demand for industrial assets has underpinned our business.
While the global pandemic has accelerated trends in our sector in a positive way we have also been mindful of customers within our portfolio negatively affected. We have provided substantial rent relief and support so they can rebound.
Q: How is your business planning to tackle 2022?
A: It will be more of the same with one of our larger challenges being the delivery of record levels of work in our development business. The supply chain issues that are frequently noted are real and we need to ensure we have the skills and expertise to deliver buildings for our customers within an extremely stressed construction sector.
The structural shift of e-commerce, customers holding more stock and many companies redesigning their supply chains will continue. We are seeing this locally in NZ but also in every one of the 14 countries that Goodman operates in globally. An area of key focus for us is continuing to acquire assets in great locations, close to consumers, many of which offer future redevelopment opportunities.
Q: What will be the major challenges and/or opportunities for your industry?
A: There are substantial opportunities at present with demand exceeding supply for warehouse and logistics space in the key locations where we invest. We are increasingly concentrating on brownfields redevelopment across our infill sites, close to significant consumer catchments.
Our challenges are making sure we keep up with customers' evolution. We have made good progress on sustainability initiatives over the course of this year but still have a long way to go. We have achieved carbon neutral operations in NZ three years ahead of our target, and with our development programme, we are aiming to build all new warehouses to a five-star green star standard and offset any unavoidable embedded carbon.
Large customers and investors alike are demanding more from businesses in reducing the impacts of climate change and we need to ensure we are at the forefront of initiatives in this area. It is great to see others in our industry also focusing on these issues.
Q: How do you think the Government has handled the Covid-19 crisis?
A: No Government in the world has been perfect and that's because it is a really tough balancing act between health outcomes, the economy and a virus that keeps evolving. Overall, I think they have done a good job.
Q: What are two key things the Government should do for economic recovery?
A: Our infrastructure is poor. We have under-invested for decades. One of the keys for me is to commit to a clear plan of infrastructure priorities as part of a 50-year plan and get on with it. Good development will follow quality infrastructure and quality planning.
Immigration settings will need to be flexible as I think there is a real risk that we will lose significant amounts of younger talent when they leave NZ as international borders are relaxed. If this talent pool is not replaced through immigration this will place huge pressure on an employment market that is already under significant stress.
Q: What was the most interesting non-Covid story of 2021?
A: A personal highlight for the Dakin family was the Tokyo Olympics. Our eldest son, Sam competed in the track cycling so we have some sense of what the athletes go through to get to that level. For our athletes to do so well with all the challenges is a credit to the whole team, but also to the organisers, who despite all the predictions of disaster, ran a near faultless games.
Q: What are your predictions for 2022?
A: Feels like it will still be dominated by the pandemic. The lifestyle changes that we have seen through this period will become embedded in society - flexible working and a greater proportion of goods bought online.
Q: What's the worst mistake you've made in business?
A: There have been a few, but I think the main thing for me is getting too emotional about things usually leads to poor decision making. At the end of the day it is business and if you keep your focus on playing the game, have a really clear strategy that you believe in, then you will make good decisions.
Having too much debt at the wrong point of the real estate cycle (or any business cycle for that matter) places your fate in the hands of others and as a group we learnt some harsh lessons in the GFC. That experience has forever reshaped the DNA of Goodman and we retain conservative debt levels in the trust together with ensuring we constantly have sufficient funds to take our business forward in a disciplined way.
Q: What would you rate as your greatest success in business?
A: The most satisfying aspect of business is seeing people develop through the organisation and in some cases beyond to be great leaders in other organisations. Seeing someone fulfil or exceed what they thought their potential was, is hugely rewarding.
From a commercial perspective, our early recognition of the structural shifts that were occurring in our sector enabled us to reposition our business to achieve optimal returns for our shareholders. We are certainly seeing the benefits of those decisions made 6/7 years ago and Covid has accelerated those trends to the point where demand now exceeds supply for the assets we own, both from a customer and investor perspective.
Balancing the shorter-term demands of equity markets can be challenging at times with a long-term asset class such as real estate. I am very proud of how we very much focus on the long term with the key decisions we make – just like Mainland Cheese – good things take time. It is that long-term thinking that has led to the creation of a unique real estate portfolio, recognised for its quality, not just in NZ but internationally.
Q: Where are you holidaying this summer?
A: We will be chilling on the east coast of the Coromandel and I can't wait!!
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