Posts filed under ‘Commercial/Industrial’

Anchor tenant announced for new business park at Hawkes Bay Airport

ABB, an international technology company that purchased Napier company Vectek Electrics four years ago, has been announced as the first tenant for a new business park being built adjacent to the Hawkes Bay Airport. The company employs 150 people at its current site in Onekawa, all of who will move into the new building. Infrastructure works are now commencing on site and ABB hope to move into the new building at the end of March 2013.

The business park is planned to cover 20ha of land when it is fully developed.

August 9, 2012 at 12:21 pm

“Growing trend of occupiers vacating earthquake prone buildings”

APN New Zealand announced on 31 July 2012 that the newspapers office which publishes local paper Hawkes Bay Today is to relocate from its existing premises in Karamu Road North, Hastings. The existing building which is stated as being in excess of the 34 per cent seismic performance score is not regarded as safe enough for the newspapers staff. They will move in March 2013 to 301 Heretaunga Street East, even though their existing lease does not expire until 2015. This building is undergoing refurbishment and will meet 100% of the current building code.
The move follows close on the heels of the NZ Post move from their building on the corner of Hastings and Dickens Street in Napier for similar reasons. NZ Post are now located in a building that is 100% compliant to the current building code, which is at Napier Central in Wellesley Road, adjacent to occupiers No 1 Shoe Warehouse and Bond & Bond. They have taken a two year lease while strengthening works are undertaken on their Hastings Street office.
This trend of occupiers deciding to vacate high seismic risk properties is likely to grow. Tremains have also decided to vacate their Taradale office on Puketapu Road for this reason. This building will be demolished and Tremains will re-occupy part of the new property.”

August 3, 2012 at 2:15 pm

Hastings Napier Rents and Yields Summary December 2011

Download the latest research on the Hastings and Napier commercial property market.

In summary 

  • Investment property yields in both Hastings and Napier are stable and remain at previous levels at 8.2% and 7.7% respectively.
  • There is good demand from investors for prime retail property, but limited supply. Industrial property is also in demand and shows the best returns, this is consistent with other regions.
  • Positive ‘Total Returns’ in both markets are now stronger and shows further improvement over the previous six months. Hastings returns 7.9% (6.7% in June 11) and Napier 7.9% (6.4% in June 11). The best performing sector once again is industrial property. The office sector is holding up due to its higher income return compared to the retail sector.

May 30, 2012 at 10:13 am

Leasehold Land Issues: Glasgow renewable lease

The following is a summary of the more detailed article on Leasehold Land Issues available here.

The Glasgow perpetually renewable lease is unique to New Zealand. Such leasing emerged in colonial times in Otago where it was used to facilitate early land settlement. The Glasgow name seems to come from the Scottish connection.

The lease format evolved over time with a number of variations.

The common urban property lease has a 21 year term with perpetual renewal rights.

Leases commencing after the mid 1970’s usually have rental reviews at 7 year intervals.

The lessor’s estate is characterized by low investment risk, low to moderate income return, simple administration.

Whereas the lessee’s estate is characterized by greater investment and business risk as he/she sets about investing into the land to generate income that will meet the rental obligations and provide a commercial return relating to the business activity.

Considerable tension develops between the objectives of the respective parties.

Conditions that generate a substantial lessee’s interest include:-

  • A lengthy period between rental reviews
  • Strongly increasing land values
  • Substantial difference between the cost of borrowing funds, and the ‘rack-rent’ percentage that is applied to the land value for the purpose of establishing the rental amount on review.
  • A confident, low to medium risk business environment.

Assessment of the lessee’s leasehold interest is discussed at the Morice Web where this subject is developed in more detail.

Leasing arrangements work best between the parties when the market remains stable which allows the lessee’s improvements and business activity to remain relevant as the ‘highest and best use’ activity for a long period.

However markets do evolve and force change in land use which is not all bad. Freehold property in that environment has more ability to make transitions in a managed fashion with less time pressure because of not having the rental burden and having access to all of the property equity coupled with better options for financing redevelopment. A leasehold property that is underperforming with the possibility of lessee insolvency, contrasted with an impossible rental burden is a disaster for both parties

November 22, 2011 at 10:07 am

Prime Rents & Yields Summary June 2011

the June 2011 Hastings & Napier Prime Rents & Yields Summary is now available for download.

Key findings

  • Market feedback shows ‘better things ahead’ with indications of more listings, more enquiry, and improved interest in the office market. But limited evidence of actual change yet.
  • Large format retail is price sensitive to rental given the extensive supply of space, especially in Hastings.
  • Napier prime retail rents continue to be close to double that of Hastings. National retailers continue to underpin leasing at earlier levels.
  • Investment property yields in both Hastings and Napier are stable and remain at previous levels at 8.2% and 7.7% respectively.

August 5, 2011 at 3:12 pm

Prime Rents & Yields Summary December 2010

Hastings & Napier Prime Rents & Yields Summary is now available. This 6-monthly “where it is at now” analysis provides a summary of the local commercial market across the retail, office and industrial sectors; the data is also related to other investment vehicles, and property markets in both New Zealand and worldwide. A condensed summary shows an unchanged yield position over the 6 months to December 2010 with the office sector worst, rental growth has declined slightly with the office sector again the worst. A generalised summary could be “steady as she goes”.

The full report is available on our website

March 2, 2011 at 10:30 am

Hastings and Napier commercial property market update

Download the latest Morice research on the Hastings & Napier commercial property markets.

In summary

The message seems to be “steady as she goes” in relation to the Hawke’s Bay property market.

Investment property yields in both Hastings and Napier have generally remained at previous levels at 8.2% and 7.8% respectively.

There is good demand from investors for prime retail property. Industrial property is also in demand but office property is not in favour. Transaction volumes are still down compared to previous years.

March 2, 2011 at 7:37 am

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