NAI Harcourts Hamilton - Newsletter - March 2023

COMMERCIAL ASSETS

Waikato Market Commentary

HAMILTON CBD MAINTAINS ITS HEALTHY FUNDAMENTALS

Hamilton CBD offers an assortment of retail and culinary experiences for all ranges of the market. With a cosmopolitan mix of boutiques and high-end fashion stores, as well as unique homeware and gifts. You can also experience some of New Zealand’s best restaurants, award-winning cafes and legendary bars

Following an 18-month period of continuous decrease, the Hamilton CBD retail vacancy rate increased by 0.6% in the second half of last year, moving from 5.5% in June 2022 to 6.1% in December. Over the six months, vacant space increased by 579sqm.

Prime grade experienced a modest increase in vacancy, moving from 6.4% in June 2022 to 6.7% in December. Newly available retail space options contributing to the increase in Prime vacancy include 290 and 291 Barton Street (previously occupied by The Bedroom Store and Caroline Eve respectively), and 527 Victoria Street, where Five Star Mini Mart vacated just over 100sqm. Secondary grade vacancy experienced a more material increase over the last six months, moving from 2.1% to 4.7%. We have recorded four new vacant units in Secondary grade in addition to the completed refurbishment of 161 Victoria Street that remained available at the end of last year. The four recently vacated units include 127 Alexandra Street (previously NUA), 16 Hood Street (previously Kung Fu Pot) and 228 Victoria Street (previously Shan Yuan) in addition to 10 Garden Place vacated by bakery business Volare. In Tertiary grade, vacancy decreased somewhat, moving from 7.6% in June 2022 to 6.8% at the end of the year, essentially representing the uptake of one previously vacant retail unit on the corner of Victoria and Liverpool Streets by Little Split P, the second-hand kids stuff retailer.

There are several redevelopments currently underway in the Hamilton CBD with implications for the retail sector, one of the most significant remaining is the new Waikato Regional Theatre at the south end of Victoria Street, which previously comprised of about 1,500sqm of retail/commercial space and which, upon completion in 2024, is expected to provide new hospitality offerings that can activate the surrounding streets and area.

Retail churn activity, or the changeover from one retail business to another, accelerated during the second half of 2022, impacting

over 3,000sqm of retail space in the CBD. Services and Food retailing were the two most active sectors, with Bars & Pubs also experiencing reasonable activity. From a total occupancy perspective, the Services, Personal retailing and Bars & Pubs sectors increased their overall footprint, while Fashion & Soft Goods and Health & Beauty retailers’ total occupied floorspace modestly contracted in the second half of 2022.

Overall, the Hamilton CBD retail market maintains its healthy fundamentals with low vacancy (the current 6.1% overall vacancy rate is well below the 6.9% annual average in the past five years); reasonable refurbishment/redevelopment activity (with some truly transformational projects in the pipeline); and strong tenant demand especially by Services, Bars & Pubs and Personal retailing businesses. Quarterly (seasonally adjusted) retail sales values released by Statistics NZ for the Waikato region show that sales values increased by 3.5% in the third quarter of 2022, making Waikato the second fastest growing region in New Zealand after only Otago (that has been benefiting from the return of international tourists), and outpacing the growth of major population centres (Auckland recorded a quarterly increase of 1.6%, with Wellington and Canterbury recording 2.0% and 2.9% respectively). At the same time, the Westpac

McDermott Miller consumer confidence index for Waikato shows a sizeable deterioration of consumer confidence in the final quarter of last year, moving from a score of 103 in Q3 to 74.2 in December. During the same period, Auckland’s index dropped to 75.1, Canterbury’s to 77.4, and Wellington’s to 82.2, indicating a widespread drop in confidence, not only from a geographical perspective but also across all age groups and income brackets. While high inflation and rising interest rates are undoubtedly squeezing household budgets, the transformation of Hamilton’s CBD into a niche retail destination is continuing, as are a number of apartment, housing and office developments that bring customers into the area to enjoy the benefits of an increasingly vibrant central city, offering a wide range of stores and services available in the central business district.

For a full copy of either the Industrial, CBD Office or CBD Retail Surveys, or to register to receive future surveys automatically, email: hamilton@naiharcourts.co.nz

Inside this issue

Annual Construction Cost Growth Hits Record High Page 2

Big Changes for Body Corporate Management & Governance Page 3

Property Opportunities

CBD vacancy by grade June – December 2022

CBD vacancy by grade 2012 – 2022

COMMERCIAL ASSETS Waikato Market Commentary

Estate Sale

21 MAHANA ROAD, TE RAPA, HAMILTON

• First time on the market in over 35 years 480sqm approx. industrial building

• 528sqm (more or less) freehold site

• Prominent location on Mahana Road, with profile to Norris Avenue

Currently configured for two tenancies

• Offered as vacant possession, in an ‘as is, where is’ basis

• Bring this property back to life! This has ‘project’ written all over it, especially for owner occupiers or add-value investors

Annual Construction Cost Growth Hits Record High

CoreLogic NZ’s Cordell Construction Cost Index (CCCI), which tracks the indexed growth of the country’s national residential building prices, recorded an increase of 1.7% in the final quarter of 2022, a significant deceleration from the record 3.4% increase in the three months to September.

However, the annual CCCI growth figure, which measures the cost to build a ‘standard’ 200 sqm three-bedroom, two-bathroom single-storey brick and tile house in Aotearoa, hit a new high of 10.4%, surpassing the previous record of 9.6% set in Q3.

CoreLogic Chief Property Economist Kelvin Davidson said a surge in new builds, materials supply issues, and labour shortages, alongside completion delays, had all contributed to the unprecedented increase to the cost of residential construction throughout 2022.

He said there had been suggestions demand would eventually ease, but evidence of a slowdown had only started to materialise in the final quarter of the year.

“For most of 2022, new dwelling consents have remained high, with smaller dwellings – especially townhouses – becoming an even higher share of the total (nationally 56% in the year to October, and 77% in Auckland),” he said.

“But the very latest data is finally hinting at the long-awaited slowdown, with October’s dwelling consent figure itself down by 12% from the same month a year ago.”

Mr Davidson warned even as new dwelling approvals slowed, the ‘huge’ pipeline of consents already granted would take time to be completed, providing builders and the industry with at least another six to 12 months of consistent work.

“Although the supply chain issues for building materials, such as plasterboard, have eased considerably, overall capacity pressures are still a concern,” he said.

“We can see the lingering strains clearly in the December quarter construction cost figures (1.7% rise), which were the lowest for the year, however the index is still running above the ‘normal’ increase of about 1% per quarter,” he said.

“The latest CCCI results are also higher than the rise of 0.9% in Q4 2021, meaning the annual rate of cost inflation has accelerated to 10.4%, the first double digit annual figure since the index was launched 10 years ago.

Annual inflation for construction costs is expected to hold at around 10% for the first quarter of 2023 Mr Davidson said, before easing over the rest of the year as the red-hot residential building sector finally starts to slow.

“Longer term, annual new dwelling consents are expected to ease from around 50,000 per year to the 30-35,000 range, which sounds like a significant slowdown, but remains higher than in previous years.

For more information or to read the report, visit www.corelogic. co.nz/reports/cordell-construction-cost-index

Source: CoreLogic Research News 9 January 2023

Auction: 11am, Wednesday 22nd March 2023, 678 Victoria Street, Hamilton CBD (unless sold prior)

Sean Stephens 027 478 1669 sean.stephens@naiharcourts.co.nz

Owner Occupiers with Holding Income

50 & 56 COMMERCE ST, FRANKTON, HAMILTON

• Two income streams from diverse and established tenants

• Returning $86,609pa net plus GST

• On-site car parking

• Profile site in CBD fringe area of Hamilton on a 835sqm (more or less) freehold title

• Total floor area of 844sqm (approx.)

• Front and rear access (rear via Sloper Avenue)

• Opportunity for investors, developers or owner-occupiers

Auction: 11am, Wednesday 22nd March 2023, 678 Victoria Street, Hamilton CBD (unless sold prior)

Theo de Leeuw 027 490 3248 theo.deleeuw@naiharcourts.co.nz

Stand Out from the Crowd

8-10 CHARLIES WAY, FRANKTON, HAMILTON

• Architecturally designed industrial building with a total floor area of 729sqm (approx.)

• 2 freehold titles of 2,041sqm (more or less)

• Secure concrete yard with parking

• Building and site with high security components

• Current site coverage only 30%, plenty of room for expansion

• Suit a multitude of industrial, manufacturing or trade supply and service activities Vacant possession offered

• Inspection recommended – we have the keys, so call us today

Sean

Nicky Allardice 021 264 2144 nicky.allardice@naiharcourts.co.nz

Sean Stephens 027 478 1669 sean.stephens@naiharcourts.co.nz

Theo de Leeuw 027 490 3248 theo.deleeuw@naiharcourts.co.nz

Stephens 027 478 1669 sean.stephens@naiharcourts.co.nz

Owner Calls Time

37 VERCOE ROAD, BEERESCOURT, HAMILTON

• Floor area of approximately 134sqm Freehold title of 222sqm (more or less)

• Currently houses Vercoe Road Foodcentre, but the owner is moving on

• Well established suburban shopping centre Convenient customer car parking in front, with tenant parking in rear yard

• Chattels list includes fog canon and security bollards

• Affordable price bracket

• Vacant Possession

Auction: 11am, Wednesday 22nd March 2023, 678 Victoria Street, Hamilton CBD (unless sold prior)

Nicky Allardice 021 264 2144 nicky.allardice@naiharcourts.co.nz

Invest in Accommodation

4 HILL STREET, HAMILTON CBD

Residential accommodation lodge featuring 32 rooms

• New 6 year lease returning $200,000pa plus GST net

• Stand alone freehold building (consisting of 4 Unit Titles) with a land area of 1,011sqm (more or less)

• Excellent CBD fringe location with on-site car parking

• Close proximity to Wintec and Hamilton Transport Centre

• Well set up and managed facility by a proven operator

Sale Price: By Negotiation

Big Changes for Body Corporate Management & Governance

As high-density housing and apartment living becomes increasingly relevant in New Zealand, and many new commercial buildings and developments are unit titled, there has been a growing need for good governance of unit titled buildings and regulation of body corporate managers.

The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 (the Amendment Act) became law on 9 May 2022. Commencement date for the new provisions have 3 key dates:

• 9 December 2022 - Provisions to support remote attendance at meetings

• 9 May 2023 - Majority of the provisions will take effect

• 9 May 2024 - Provisions that require further regulatory development or preparation

The Unit Titles Amendments Act changes include:

Mike

027 451 5133 mike.neale@naiharcourts.co.nz

Could NAI Harcourts Property Management add value for you?

Whether it be just facilities management or full property management, we have the expertise, knowledge and systems to also assist you with:

• Strategic planning for your property

• Compliance with all regulatory requirements

• Leasing management & property inspections

• All repairs and maintenance

• Management, monitoring & negotiating service contracts

• Annual budgets, rent collection & debtor control

• Property accounting services

• Body Corporate management

• Statutory compliance and insurance

Our management fees are often

Ra Piripi 021 838 887 ra.piripi@naiharcourts.co.nz

included as part of the operating expenses for a commercial property and therefore are recoverable from the tenants. We can take the day to day responsibility away from the client by managing the entire process and freeing up the owner’s time to concentrate on other opportunities.

If you would like to discuss how we can help with any of your property management requirements, please contact:

Greg Wills at NAI Harcourts Hamilton.

greg.wills@naiharcourts.co.nz

M: 021 896 585

Greg Wills

• requirements for a wider range of information to be provided to prospective buyers. It also provides buyers with additional rights if these requirements are not met.

• strengthen governance arrangements in relation to a body corporate.

• raising the professional standards required of body corporate managers.

• ensuring adequate planning for long-term maintenance projects.

• introduce new dispute resolution rules and fees.

• will allow for greater flexibility in relation to utility interests and charges to unit owners.

• new regulatory powers

Previously unregulated, body corporate managers and the standard of their services are a key feature of the Amendment Act. Large unit developments’ with over 10 units will be required to engage a body corporate manager, unless they opt out by special resolution. The engagement of body corporate managers will need to be recorded in a written agreement and the agreement must include certain provisions, such as reporting requirements, performance targets and reviews, grounds for termination etc. Should you have any Body Corporate enquiries, please feel free to get in contact with our dedicated Body Corporate team.

Greg Wills: greg.wills@naiharcourts.co.nz or 021 896 585

Sean Stephens 027 478 1669 sean.stephens@naiharcourts.co.nz

Neale

Boundaries are indicative only

RECENT SUCCESS

Hamilton

In Excess of $23 Million Worth of Transactions (1 Nov. 2022 - 31 Jan.

RESIDENTIAL MARKET INSIGHTS

Other Sale & Lease Transactions to name a few....

• 14/42B, John Spencer Way, Hamilton Airport

• 16-20 Knox Street, Hamilton CBD

• Building F, Level 2, 204 Anglesea Street, Hamilton CBD

• 1396 Arthur Porter Drive, Te Rapa, Hamilton

• Unit 6 & 7, 219 Collingwood Street, Hamilton CBD

• Unit B, GB82, 124 Commerce Street, Frankton, Hamilton

• 22 Evolution Drive, Horotiu

• Building 6, 29 Goodfellow Place, Te Rapa, Hamilton

• Ground Floor, 384, Grey Street, Hamilton East

• Suite 1.1.6, 169 London Street, Hamilton CBD

• Suite G2, 169 London Street, Hamilton CBD

• Unit 2, 28 Mahana Road, Te Rapa, Hamilton

• 21 Massey Street, Frankton, Hamilton

• 32 Matos Segedin Drive, Cambridge

• Unit 1, 145 Ossie James Drive, Hamilton Airport

• Unit 6, 180 Ossie James Drive, Hamilton Airport

• Unit 7, 43 Pembroke Street, Hamilton CBD

• Shop 6, 36 Prisk Street, Melville, Hamilton

• 109A Rostrevor Street, Hamilton CBD

• 501 Rotokauri Road, Rotokauri

• 2B Sunshine Avenue, Te Rapa, Hamilton

• Part Ground Floor, 422 Te Rapa Road, Te Rapa, Hamilton

• Ground Floor, 554 Victoria Street, Hamilton CBD

• Ground Floor, 337 Victoria Street, Hamilton CBD

• Suite B, Level 1, 341 Victoria Street, Hamilton CBD

AGENCY TEAM

Kara Gerrand 021 527 211 CBD & Fringe CBD

Mike Neale 027 451 5133 CBD & Fringe CBD

Brad Martin 027 889 3018 CBD & Fringe CBD

Ra Piripi 021 838 887 CBD & Fringe CBD

Theo de Leeuw 027 490 3248 Frankton

Sean Stephens 027 478 1669 Te Rapa East

Nicky Allardice 021 264 2144 Te Rapa West

Aaron Donaldson 027 755 7522 Industrial

Brad Chibnall 021 448 989 Suburban East

Jay Kaushal 021 777 291 Suburban West

PROPERTY & BODY CORPORATE MANAGEMENT TEAM

Greg Wills 021 896 585

59 KILLARNEY ROAD FRANKTON, HAMILTON

UNIT 3, 145 OSSIE JAMES DRIVE, HAMILTON AIRPORT

829 VICTORIA STREET, HAMILTON CBD 1A, 130 ROSTREVOR STREET, HAMILTON CBD

13 COMMERCE STREET, FRANKTON, HAMILTON

77 FACTORY ROAD, OPOTIKI

7A RUAKURA ROAD, HAMILTON EAST

GRND FLR, 111O VICTORIA STREET, HAMILTON CBD