Growth anticipated despite mired land values

Strong tourism and existing and developing industries in Hawke's Bay - apples, wine, water bottling, etc - are insulating the region from poor dairy performances elsewhere.

"Hawke's Bay is trucking," says Turley & Co's Industrial Property Market Report for the quarter to January 31.

"Strong tourism and existing and developing industries in Hawke's Bay - apples, wine, water bottling, etc - are insulating the region from poor dairy performances elsewhere," the report said.

While industrial land values were mostly stagnant, near-term growth was anticipated.

Yields were firming for prime properties and rent variation between new and existing properties was increasing.

As Havelock North and Ahuriri decreased as industrial precincts, Whakatu, Elwood and Omahu Roads in Hastings increased. Hastings District Council rezoning of Omahu Road rural land to industrial was believed imminent.

While Hawke's Bay industrial land supply was good it was "tightly held or land banked".

The Retail Property Market Report said the retail sector also had a rosy outlook, thanks to a growing Hawke's Bay economy and cruise ship visits to Napier.

Havelock North's retail heart remained "particularly strong" with upwards rent pressures and more buildings under construction or planned.

The demolition of Hastings' Albert Hotel, replaced by greenspace "is a positive for a better community CBD feel " this has worked".

Seismic issues would continue to affect values, as they do in the office-building sector.

The Office Property Market Report said development in the sector was "frequent, largely encouraged by Hawke's Bay tenants reshuffling" with seismic considerations often a main reason for moving.

"Seismic performance is still a key relative value consideration and will remain so for the foreseeable future."

Napier tenants continued "to migrate to popular Ahuriri".

"Of all Hawke's Bay's preferred office locations, Ahuriri has seen disproportionately high office activity since 2012. The quayside suburb that has attracted government agencies and various professional services tenants has over decades progressively transformed from an industrial locality, into a vibrant office locality alongside popular bars, restaurants and apartments."

Havelock North was experiencing "a similar dynamic".

While rents for some new premises in Napier and Hastings were high, signing inducements were undisclosed.

Rising construction costs continued to impact values in all sectors.