Pāpāmoa Junction on Parton Rd in Pāpāmoa East is a 52,000sq m mixed development precinct.
Pāpāmoa Junction on Parton Rd in Pāpāmoa East is a 52,000sq m mixed development precinct.
The impact of rising interest rates and building costs are being felt at a $200 million Tauranga development that sold out within months two years ago – despite being “amazed” at inquiries from tenants to rent properties.
Colliers International Tauranga managing director Simon Clark said PāpāmoaJunction – a mixed commercial and residential site on Parton Rd in Pāpāmoa East – was going well but acknowledged building had not started on all 43 lots at the 52,000-square-metre precinct.
“Developers that would have been able to do things two years ago are struggling with funding and interest rates. Some are sitting on their hands because building costs are so expensive,” Clark said.
“If we see a drop in interest rates next year then I think it will start to stimulate as rising interest rates decrease the value of that building and make developments less viable.”
Clark said there was good tenancy demand and “we’ve got really strong interest, it’s just a matter of getting them built”.
“We’re amazed at the tenant demand... we’ve done 30 leases there in not-so-positive economic times.”
Clark said Pāpāmoa East was growing and the development was about servicing the suburb.
Three complexes were complete, including Junction Worx and Junction Studios. The Hatch was a mix of units between 50-90sq m and all were let or owner/occupied. Investment units had a mix of light industrial, fast food and health and beauty.
Spring Pāpāmoa was due to be completed in a month and was focused on health and wellness, with some eateries.
The Hatch at Pāpāmoa Junction.
Zaha Capital director Tyler Tabak said it had sold 17 of 23 buildings in The Hatch. Titles had been issued and tenants and owners had moved in.
“A lot of those sales actually came earlier on in the process. It’s been two years since we started the design and consent phase to it being finished in July. There haven’t been as many sales at the back end as it was at the front end.”
Tabak agreed the high-interest environment had made it harder for small to medium businesses to buy their own buildings.
“Leasing is probably favoured at the moment over purchasing. We’ve decided in the last week or so we would look at leasing as well. The leasing inquiry is strong and the growth of Pāpāmoa is supporting the development out there.”
Barrett Homes is building 41 residential townhouses at Pāpāmoa Junction.
Barrett Homes general manager Maree Melton said The Helm development at Pāpāmoa Junction had 41 townhouses across two stages.
Stage one had 25 two-bed and three-bed architecturally designed homes priced from $680,00 with some foundations expected to be laid before the end of the year.
Expressions of interest had been “great”, Melton said.
“With 15 lots now accounted for and more contracts expected within the coming week, stage one is expected to sell out soon.”
Melton said that, like most industries, it had to move with the times to accommodate the market and create more affordable housing.
“We did this by simplifying the builds, without compromising on design or quality. Because of this, it did delay getting the plans out to market.”
Priority One chief executive Nigel Tutt said the Western Bay was short of land for residential and commercial expansion.
“Projects like this are an important part of allowing businesses to grow and flourish in the region. Pāpāmoa will undoubtedly see more growth in the future and will be an option for businesses wanting to base themselves close to the action.”
Tauranga City Council city planning and growth manager Andrew Mead said 25 building consents had been issued at Pāpāmoa Junction with a total value of works of $29.4 million.
“This development is providing for commercial and business needs for the Pāpāmoa East area rather than a broader city or sub-regional scale. It will provide a range of additional commercial offerings to local residents as well as job opportunities.
“This will bring greater balance to the Pāpāmoa area, which is currently residentially-focused with significant outflows of people to access jobs and services.”
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
