Is the industrial market really recovering? Does a few sale indicate recovery? Well, if this is the logic, I can also say the office market has already recovered, as signaled by Bob Jones's purchase of Forsyth Bar Tower on 55 Shorthand Street in June this year.
Source: http://www.nbr.co.nz/article/tentati...-market-115986
Tentative recovery in industrial property market
Jazial Crossley | Monday December 7 2009 - 11:54am
The industrial property market is looking more positive, with an increase of multimillion dollar sales occurring recently but an excess of properties plagues the market.
According to the latest research from commercial property company Colliers after stalling in late 2007, the industrial property engine is running again - but only in first gear.
"It has always been a truism that quality property outperforms secondary property over time, but this has seldom been so clearly evident as in the last twelve months in New Zealand’s industrial property markets,” Colliers head of research Alan McMahon said.
The rate of rent that industrial properties charge has fallen and the incentives landlords need to offer have increased as with all sectors of the property market during the recession. But private equity investment remains robust and there is some development activity being seen.
Last week at Goodman Property Trust’s Highbrook business park in East Tamaki, Australian-owned glass manufacturer Viridian Glass opened its newly completed glass processing factory and it plans to build two more by 2012.
In terms of recent industrial sales, a Goodyear and Dunlop tyres re-treading plant in East Tamaki sold for $2.5 million recently, a North Harbour industrial building sold for $9.4 million, and a 6,475sq m industrial property at Wairau Valley on Auckland’s North Shore sold for $3.5 million.
In all of these three cases the buyers were private investors, but that’s not to say the big players aren’t still active – Direct Property Fund recent $53 million purchase of the Fisher & Paykel Appliances headquarters at East Tamaki being one example.
"Industrial investment parcels are often smaller, and less complex than office or retail property counterparts, and it is not surprising that this asset class has seen the quickest recovery in investor demand. However, there are many older buildings to lease or for sale, but little demand, while there are very few modern large buildings for sale as investments, which is what private investors are keen to buy,” Mr McMahon said.
The biggest problem in the industrial property sector is that there is an excess of industrial properties on the market, particularly in South Auckland where the number of buildings up for lease in the category skyrocketed from only 50 to 500 in the past two years.
Jazial Crossley | Monday December 7 2009 - 11:54am
The industrial property market is looking more positive, with an increase of multimillion dollar sales occurring recently but an excess of properties plagues the market.
According to the latest research from commercial property company Colliers after stalling in late 2007, the industrial property engine is running again - but only in first gear.
"It has always been a truism that quality property outperforms secondary property over time, but this has seldom been so clearly evident as in the last twelve months in New Zealand’s industrial property markets,” Colliers head of research Alan McMahon said.
The rate of rent that industrial properties charge has fallen and the incentives landlords need to offer have increased as with all sectors of the property market during the recession. But private equity investment remains robust and there is some development activity being seen.
Last week at Goodman Property Trust’s Highbrook business park in East Tamaki, Australian-owned glass manufacturer Viridian Glass opened its newly completed glass processing factory and it plans to build two more by 2012.
In terms of recent industrial sales, a Goodyear and Dunlop tyres re-treading plant in East Tamaki sold for $2.5 million recently, a North Harbour industrial building sold for $9.4 million, and a 6,475sq m industrial property at Wairau Valley on Auckland’s North Shore sold for $3.5 million.
In all of these three cases the buyers were private investors, but that’s not to say the big players aren’t still active – Direct Property Fund recent $53 million purchase of the Fisher & Paykel Appliances headquarters at East Tamaki being one example.
"Industrial investment parcels are often smaller, and less complex than office or retail property counterparts, and it is not surprising that this asset class has seen the quickest recovery in investor demand. However, there are many older buildings to lease or for sale, but little demand, while there are very few modern large buildings for sale as investments, which is what private investors are keen to buy,” Mr McMahon said.
The biggest problem in the industrial property sector is that there is an excess of industrial properties on the market, particularly in South Auckland where the number of buildings up for lease in the category skyrocketed from only 50 to 500 in the past two years.
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