SECTOR COMMERCIAL
New Plymouth riding regional New Zealand’s success
Benet Carroll, Director Colliers New Plymouth
New Zealand’s commercial property market is experiencing a prolonged period of growth with many of the regional centres reaping the rewards. The city of New Plymouth, perched on the west coast of the North Island, has benefited from a recent influx of investor capital and a surge in development.
In March 2018, when Colliers established the New Plymouth office, the commercial property landscape was very different. Industrial land values were sitting at $70 to $90/sqm while around 15% of the primary industrial precinct sat undeveloped and unwanted by developers and owner occupiers. Yields being achieved for prime assets averaged approximately 7.5% and the majority of investor demand was from retiring farmers. Fast forward to post-COVID 2020/2021 and things have changed dramatically. Land has been absorbed to a point where there are few options left. Prime yields have compressed to a new benchmark of 5.5%, with strong demand coming from aggressive non-local investors chasing the comparatively higher returns than they obtain in the main centres. New Plymouth appeals to investors because of the underlying strengths of the region. The economy is underpinned by agriculture, construction, the petrochemical industry and
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The Real Estate Institute of New Zealand
manufacturing, with the latter being the region’s largest employer. In terms of productivity, Taranaki’s GDP per employee measures $157,000 which is 34% higher than the New Zealand average and one of the top performing regions in the country. The wider Taranaki economy is performing extremely well, bolstered by a residential and infrastructural construction boom. Net migration is increasing, reflected in the number of residential building consents which are up 30% on last year. Several multi-million dollar developments are planned to start in 2021, including the redevelopment of the Taranaki Base Hospital. The Government has committed $300 million to undertake this significant project. At the time of writing, there are 19 industrial development projects consented for or under construction in New Plymouth’s primary industrial precinct of Bell Block, which covers an area of 260ha. The majority of development is being undertaken by owner occupiers though there is an increasing appetite driven from speculative builders.
