A lack of industrial property for both leasing
and investment sales is currently driving
the market as is strong interest in tenanted
investment opportunities. The latest census
statistics show that Rotorua has had a
population increase of 10.5% and the Bay of
Plenty is second behind Northland as one of the
fastest growing regions in New Zealand.
With the amalgamation of many of the
professional legal and accountancy firms in
Rotorua, there has been an abundance of large
and medium office space vacancies. This has
had a significant impact on rents given that
some of these properties have been vacant for
over 12 months and landlords are desperate to
minimise their negative equity.
Recent new builds include a three storey
1,400 square metre premises with new leases
to a local legal firm and the Bay of Plenty
By Wayne Parsons
NAI Harcourts Napier
Although there is talk on the streets that the
market is tightening in Hawke’s Bay, we’re
not seeing it. Buyers in the local residential
market are still in a competitive environment,
supporting a generally positive business
sentiment while entrepreneurs are still
looking for small, medium and start up
Demand is generally outstripping supply
for good quality property and has been for
some time now. Tenants and existing owneroccupiers,
looking to secure their ideal site for
the future, continue to apply pressure to the
Council’s investment in infrastructure has been
positive for the region and further projects are
in the planning stages or already underway.
The industrial sector is experiencing strong
rental growth and demand due to the lack
of available industrial sites in Rotorua and
strong demand for local contractors who
are expanding their businesses due to major
developments in the Rotorua district. Yields
have reduced by about 1% in this sector, and
whilst the demand continues and supply is
short, this appears to be a trend that will carry
on given there is very little industrial land
zoned for future development.
This sector is showing dramatic decline given
the exit of a number of major national brands
from Rotorua including Factorie, Stevens
and Bendon, as well as the amalgamation of
Warehouse Stationery and The Warehouse.
However, one of these spaces has been filled by
Torpedo7 which has been looking to enter the
Rotorua market for the past year.
There is little enquiry from franchise companies
that are not represented in Rotorua and an
Substantial movement by hotel operators and
care facilities to the area, and use changes to
existing properties due to Council’s desire to
support growth and vibrancy in the region’s
CBDs, offer opportunities for active investors
Quality mixed-use and office developments
are underway in Hastings, generating good
interest. Healthy demand is there for some of
the B+ Grade stock, but supply still outstrips
demand and stock is slow moving. Low grade
space is available for those who want it, often
lacking parking, requiring strengthening or
Vacancy rates are still low in Napier’s industrial
areas, leaving few options for tenants to
relocate their businesses if required or desired.
Land is also in short supply, compounding
Hastings has more options for industrial
development and larger premises are sitting
on the market a little longer. Well located trade
retail sites are tightly held and very hard to
secure in some areas. Land values (based on
analysed square metre rates) have increased
across all areas but are most evident in
Onekawa and Whakatu due to short supply
and roading infrastructure.
Sale yields vary due to market confidence in
the specific area and type of use. Quality stock
is in high demand and the desire to retain
ownership due to a lack of good alternative
investment options will continue to restrict the
supply of quality new stock.
even smaller number of enquiries from new
businesses wishing to enter the market.
The two major developments surrounding the
CBD are Lynmore Junction and Trade Central.
Enquiries have been coming in but tenancy
occupation is slower than expected considering
the anchor tenants in both sites.
There continues to be good momentum and
interest in the Rotorua café scene which is
being driven by the continued rise in tourism
activity within the Rotorua district. Businesses
in the hospitality and accommodation sectors
have had strong interest from buyers, and in
most cases are turned over within a couple of
months of being on the market. Backpacker
and motel accommodation are also heavily
sought after to cater for the ever-expanding
residential market. Given there are over 3,200
Airbnbs in Rotorua, high density housing and
accommodation blocks are popular with
investors. Retail businesses are extremely
difficult to sell and this trend is expected to
continue over the summer period.
Retail vacancy is low in general compared to
previous years. There has been some positive
movement through Heretaunga Street East in
Hastings, which now has a lower vacancy rate
than its western counterpart – driven mainly
by Council directives to promote the area
There’s still plenty of opportunity for growth
with quality options available for businesses
wanting to expand into the Hawke’s Bay
market. Tenanted and vacant options of
various sizes and locations are also available
to purchase in both centres.
BUSINESS & HOSPITALITY
Some quality businesses sold recently with
good buyer interest shown on the back of
increased market confidence.
Property owners are also looking at alternative
uses for their commercial properties with many
seeing higher returns being obtained from
conversion to accommodation type uses.
Multiple new hotel developments are
earmarked in both cities, which is long overdue,
particularly in Hastings. Commercially zoned
properties that have beach-front positions or
sea views are proving very popular and have
been earmarked for tourism developments.
naiharcourts.co.nz LOCAL EXPERTS, GLOBAL NETWORK. 15