In one of the fastest uptakes of industrial land seen in the Auckland region, the sell-down of the Ambury Property-initiated subdivision in Tidal Road, Mangere, is reflective of the fundamentals at play in the industrial property sector nationwide.
The land at 72-88 Tidal Road sits within an existing industrial precinct close to the airport and parallel to the Southwestern motorway.
The launch of the 12-lot industrial subdivision mid-2019, dovetailed with the heightened demand for well-located premises, as high-profile businesses in the logistics and distribution sector jostled for pole position close to main arterials and critical business infrastructure to underpin secure and efficient supply chains.
Bayleys’ national director of industrial and logistics Scott Campbell, along with Bayleys South Auckland Industrial sales and leasing specialists Sunil Bhana and Jamsheed Sidhwa, have concluded the bulk of the transactions within the Tidal Road subdivision to date.
This includes both sales and leases, with a combined total of $135 million and a further $25 million under contract.
Campbell said the identified chronic shortage of industrial development land with scale in the Auckland catchment, has created a frenzy of activity in the market, with smart businesses looking to optimise their footprint in the competitive sector.
“The industrial sector continues at pace nationwide and is the hero for investment performance and investor confidence.
“This is amplified in Auckland, which remains under pressure to keep up with demand for warehouse and distribution space.
“The land in Tidal Road has opened up new opportunities for the supply-constrained marketplace and Bayleys has sold down more than 60 percent of the sites, some twice-over as the secondary market is also very active.”
Prices achieved for the land lots sold by Bayleys to date range from $463 per square metre to $536 per square metre and comprise sites of between 4,920sqm and 25,231sqm of useable land.
Bhana said the largest of these lots has an actual land area of 49,885sqm, with around half of this being protected wetlands. Bayleys worked closely alongside the developer on a new facility on the site for a large New Zealand retail and distribution chain.
“Bayleys facilitated development specifications and undertook a review of feasibility construction costings, as the site had some inherent physical challenges.
“There were many factors to be considered such as wetland preservation, boundary setbacks, retention of volcanic view shafts and Iwi consultation.
“Bayleys has significant in-house management and development expertise to draw on, along with extensive professional industry networks which are beneficial to our clients as they approach major purchase and leasing decisions.”
Campbell said there is “a wall of capital looking for a home” in New Zealand currently, with the industrial property sector finding favour with listed property entities, institutional investors and high net worth private investors.
“Well-located large scale shiny sheds with long lease terms and strong tenant credentials are in high demand and there simply isn’t enough new stock coming through the pipeline to satisfy this appetite.
“Bayleys has also concluded numerous leases across the Tidal Road subdivision and some of these have resulted in significant investor interest in the resulting tenanted proposition.
“Property for Industry Limited (PFI) recently finalised an agreement to purchase an industrial warehouse and office in Tidal Road being developed by Aintree Group for Supply Chain Solutions (SCS), a market leader in third, fourth and fifth party logistical services.”
Sidhwa said the multiple transactions across this particular lot within the Tidal Road development, epitomises the partnership approach Bayleys takes with its clients.
“We brought together a tenant, SCS, who were wanting to further expand their warehousing capacity, with well-regarded developer Aintree Group, and then closed the loop with NZX-listed PFI who funded and acquired the land and buildings.”
The Mangere area remains sought-after as a base for industrial businesses who require ready access to main arterials and the airport.
Sidhwa said the COVID-19 situation has not dampened investor enthusiasm in the industrial market and vacancy remains low in the wider South Auckland precinct.
“These Tidal Road properties will add quality and scale to the South Auckland industrial pool.
“The Waterview tunnel has been a game-changer for the South Auckland industrial market as it’s strategically connected parts of Auckland that were not efficiently accessible previously.
“It means that businesses basing themselves in Tidal Road will have every connectivity tool at their disposal and with speed to market being the driving force behind the logistics and distribution sector, location speaks volumes.”