CONFIDENCE in Hawke's Bay's economy is causing a flurry of commercial property developments.
Turley & Co property consultant Kurt Richards said new developments were widespread.
"New developments are in locations scattered right across the Bay for retail, office and industrial so it is not just one area or sector improving," he said.
Colliers International have more than 20 developments "on campaign" finishing December.
"We're only a week and a half into it and three of four have already gone," director Cam Ward said.
"What we are seeing now is that people have got more confidence in Hawke's Bay as a region. Instead of one or two major players doing developments, you are getting other people having a crack at making things happen."
Activity had been building over time and accelerating due to interest rates at a record low and the Hawke's Bay economy outperforming dairy-dependent regions.
It helped that Hawke's Bay property was cheap. Kiwibank's decision to set up a service centre in Hastings was "purely a business case on cost" but a "real coup and a precedent-setter".
He said another coup for the region was Porters Boutique Hotel.
Under construction by Mackersey Construction, the $25 million hotel, retail and commercial office complex is a partnership between the Lowe and Mackersey families.
Developer David Mackersey said the construction industry was very busy in Hawke's Bay.
"There are a lot of developments happening - certainly this year and for the next couple I believe we will be very busy," he said.
"We've had the water plant going in and then you have a lot of government spending coming up with the airport and police stations etc and there is a lot more to happen, plus there is all the earthquake-strengthening work."
The highly-visual nature of many developments helped promote an air of optimism and every development was a catalyst for another.
Developer Jonathan Wallace of Hawke's Bay-based Wallace Developments said there were a dozen new developers in Hawke's Bay but without strong tenant demand the region's market was "middling".
Because of a shortage of local tradespeople, attracted to busy Auckland and Christchurch markets, constructions costs were going up.
The investment market was strong - where there was a good tenant in place there was no problem finding a buyer.
Bayleys commercial team leader Daniel Moffitt agrees. The real estate agency's most recent sale, Turner Place in Onekawa with an 8.6 per cent yield, "didn't even make it to the market - a buyer from out of the region purchased the property".
He said there was strong inquiry for industrial land for development and warehouses to cope with the increasing apple harvest.
Bayleys research analyst Goran Ujdur said with Hawke's Bay's primary produce sector exports up 16 per cent in the year to March 2015 compared to the same time last year, and the Port of Napier anticipating total container volume growth to reach 20 per cent over the coming year, infrastructure building was strong.
"A standout performer in the industrial sector has been the construction of new coolstore and packhouse facilities supporting the growth and expansion in the horticulture sector," he said.
"Demand for further storage and logistics related facilities is expected to continue to grow."
The strong influence of primary industry was reflected by a high proportion of specialist buildings such as pack-houses, cold/cool stores and controlled atmospheric buildings catering for corporate and independent growers. The Tomoana Food Hub, a 16ha industrial park on the outskirts of Hastings, has plans for more than 100,000sq m of factory space for food companies.
Strong export prices were also a driver.
"The apple industry in particular is leading a mini-boom in new storage and processing facilities. For example, miniature apple grower and marketer Rockit has invested $17 million into a purpose-designed and built state-of-the-art food packaging facility in Havelock North which employs more than 70 people during the harvest season," he said.
"Simultaneously, a number of wineries have also committed to new facilities - including Delegat Group's landmark 19,000sq m wine making facility on a 13ha site on the corner of Evenden and Ormond Rds in Hastings.
"Villa Maria also has plans to construct a 16,000sq m facility next to Te Awa Winery in the Gimblett Gravels."
Office and industrial properties outside the primary sector were relatively subdued after a "burst" of development and tenant reshuffling over 2012/2013.
"This has led to increased vacancies amongst poorer grade commercial premises in both Napier, and to a larger degree, Hastings.
"This vacancy situation will take time to resolve.
"Activity in Napier's CBD office leasing market remains very subdued. Much of the development activity that occurred over the 2012-2013 period was largely a reshuffling of existing tenants into better quality space along with some speculative seismic strengthening.
"Rents for both office-showroom and warehouse space has remained relatively flat over the past year, and are expected to remain flat for the next 12 months. With plenty of appropriately zoned land available, any increase in demand is readily meet with supply which keeps a natural cap on rental growth."
The retail sector was struggling.
"Reflecting the challenging conditions for traditional CBD retailers, Napier prime retail rents have remained flat over the last 12 months - with little growth expected over the next year.
"Secondary location rents have softened over the past 12 months, and with high vacancy rates persisting in some poorer-quality locations, further softening is likely going forward.
"Both prime and secondary retail rents in Hastings, which are around half the value of those of Napier, have weakened over the last year, and with current vacancy levels continuing to remain soft, further falls are expected.
"Further retail closures are expected, and with weak retail demand, shop vacancy rates are unlikely to show any significant improvement any time soon."
Mr Ward said Hastings' Heretaunga St's string of retail buildings was too long "but it is what it is and it is about dealing with it pragmatically and finding a solution".
Hastings had traditionally out-performed Napier from a retail perspective.
"I think that council and local building owners are all keen and have a desire to make sure we can resurrect the main street, to get it back to its former glory."
He said the Ruataniwha Water Storage Scheme was critical to keeping up the momentum in the commercial property sector.
"It's an infrastructure project we need for Hawke's Bay that would drive a lot of professionals and capital into town.
"It is going to create land-value increases we haven't seen before. When people are creating equity in their farmland and getting more intensive cropping it just creates jobs and a big giant circle. Companies are doing better, the warehouses are doing better and people start looking at buying investment property.
"That is all stimulated from one thing and it would be a real driver for Hawke's Bay as a region with the port going gangbusters at one end, the dam at the other and Hawke's Bay in the middle."