New Zealand billionaire Graeme Hart's fortune has been put at $12b-plus. Photo / Getty Images
A new national industrial property rent record has been set on a 1.3ha twin-building project for a Graeme Hart business as part of his $200 million-plus logistics expansion in Auckland.
Hart's Fernbrook, owned by his Rank Group, has achieved $190/sq m annual rent for one nearly-finished building when the previous high was put at $160/sq m annual rent.
National construction firm Haydn & Rollett has the roof trusses up on the new storage/office building at 90 Pavilion Dr, Māngere, backing on to Oruarangi Creek and beside the Villa Maria estate.
Agents are advertising both buildings.
Property For Industry chief executive Simon Woodhams said he had heard a record $190/sq m had been achieved by Hart for one of the Pavilion Dr buildings. An agent said the first building had been leased for $185/sq m for the industrial areas and $300/sq m for the offices.
"I'm not sure what Hart's expectations were but his rents are at the top end," Woodhams said.
"Hart is setting new benchmarks in rental levels," the agent said.
Colliers previously had the top prime Auckland industrial rent at $160/sq m but experts said the buildings set rent records for good reasons.
"The rent reflects the additional cubic capacity enabled by such new higher-specification buildings which are future-proofed for storage technology advances and have sophisticated sustainability measures," one consultant said.
Rising land and construction costs fed further into that to result in the high rent.
The twin-building project is hitting the market at the right time. Leasing activity in the logistics/warehouse sectors is at an all-time premium, reflected in the high profitability of listed industrial stocks Goodman Property Trust and Property For Industry whose share prices are up lately.
In what one sector expert called a "lockdown project", Hart has considerably expanded his New Zealand business interests lately, spending at least $189m on industrial South Auckland properties. In separate investments, he has spent more adding to his food businesses and buying South Auckland residential.
Hart's fortune has been estimated at more than $12b.
The Herald reported in November how Fernbrook owned by Rank Group planned to build two vast new warehouses to cater for the logistical/storage sector. Those buildings will have a total area of 1.3ha or 13,720sq m.
Construction of those warehouses on a site Hart's company bought for $21m is now advanced. The buildings have internal heights of 16.75m which allows more goods to be stored by stacking them higher than inside more traditional lower-stud buildings.
By December, Hart's Fernbrook aims to finish the 8290sq m warehouse with 420sq m of offices and a 1710 canopy, along with a 5200sq m warehouse with 300sq m of offices and an 800sq m canopy.
Fernbrook is owned by Rank Group which Hart controls as part of his New Zealand interests, which only account for 10 per cent of his overall global business assets.
All up, 68 car parks will be provided at the Green Star buildings with many roller doors to allow easy access for trucks and drive-through operation areas for loading and unloading.
That is in one of the city's fastest-growing industrial areas beside the former wine estate sold to Goodman Property Trust, which is planning a huge new logistics/warehouse park there.
The street where Hart is developing already has other businesses along it, including Pacific Freight Management, but also other greenfields opportunities.
Attractions for developers and tenants are that the street has good connections to George Bolt Memorial Dr to the airport and is near motorway connections.
Colliers' first-half Auckland industrial report said overall vacancies declined to a meagre 1.9 per cent in February from 2.2 per cent a year earlier.
"Vacancy rates declined due to ongoing strengthening in demand factors. Online retailing's continued expansion fuelled the requirement for additional storage, distribution and last-mile delivery facilities. Both residential and commercial development pipelines are increasing and major infrastructure projects are being progressively rolled out which are also adding to demand," Colliers said.
Last year the Herald reported on Hart buying South Auckland industrial properties in five deals worth $189m. Those purchases were:
• 90 Pavilion Dr on the edge of the Villa Maria Estate, itself about to become a $500m industrial office park;
• A 28ha block of land at 31 Prices Rd off Puhinui Rd in the Manukau/Wiri area for $94m;
• A block of 3.8ha of undeveloped land at 9 Jerry Green St off Roscommon Rd, East Tamaki;
•68 Cryers Rd, East Tamaki, developed land in the hub of a commercially highly active zone;
•11 Greenmount Dr, East Tamaki, for $18.2m in a deal brokered by agents including from JLL.
Alistair White, managing director and founder of Auckland planning and resource management consultancy Planning Focus, has been involved in many Hart deals and White lists Rank as one of his clients.
He is understood to be closely involved in the Pavilion Dr project but isn't saying anything about his dealings with Hart.
The Māngere project is one of the most advanced in terms of new developments by Hart's businesses.
Bayleys, Savills, JLL, Colliers and others have "for lease" ads out on the warehouses, offering naming rights in ad headlined "huge new airport logistics facility".
Marketing says: "Do not miss this exceptional industrial facility situated in the heart of the airport industrial precinct".
Haydn & Rollett has been contracted to achieve practical completion by December, the agents said. Construction progress indicates they're well on target to reach that goal.
The same builders are nearly finished the new $100m-plus Costco warehouse at Westgate on the city's north-western fringes.
Costco is due to open there either next month or in early September.
The warehouses are targeting a Green Star 5 rating and will offer occupiers fantastic road frontage, fully sprinklered high-stud clear span warehouse with high spec floors, two levels of office/amenities, generous canopy along with a drive-around site and plenty of onsite car parking, marketing says.
"The Airport Oaks precinct continues to be a highly desirable and extremely sought after location and is home to some of the world's largest freight and logistic companies. With the new roading upgrades, this proven industrial precinct has easy access to all of Aucklands main arterials," marketing said.
These new buildings will be in extremely high demand from occupants involved in freight, postage, online shopping and goods storage and delivery. Experts say Hart could be booking development margins of up to 20 per cent for each new warehouse his companies develop, as well as striking long-term leases of eight to 10 years. He's well advanced on the new builds, and agents are already seeking tenants.
Hart said last year via a third party that information from agents and property records would give a "fulsome picture" of his companies' industrial property interests.
No price is being put on how much the warehouses are being leased for annually.
"Price by negotiation", the marketing says.
Colliers' latest research said average prime net face rents for Auckland industrial were a maximum of up to $160/sq m.
Tenants will be paying more than $2m/year to rent Hart's new warehouses based on those numbers, although early leasing results revealed the higher $185/sq m for industrial.
But on top of the cash flow is the big value uplift that comes with developing large purpose-built premises in such high demand. That's where the 20 per cent development margin could come in, sector experts say.
Industrial projects dominate new supply, the study found, comprising 65% of new stock.