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Christchurch

Christchurch west is best


 

 

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​Christchurch is set to develop into the key industrial and distribution hub for the South Island, according to JLL’s latest research report, The Industrial evolution of Christchurch. 

JLL anticipate that in the coming 10-20 years, Christchurch will consolidate into a core of industrial operations creating a gateway for storage distribution and the import and export of goods by rail, road, air and sea. 

“Although the trend had emerged long before the Canterbury earthquakes, the earthquakes have acted as a catalyst in this evolution, accelerating the centralisation and growth of south island industrial operations in the Christchurch market,” says Tom Barclay, Research Analyst at JLL and author of the report. 

“The growth has sparked a significant change unlike anything that has been seen before in the south island and conceivably greater than that seen on an even wider, Australasian scale.” Barclay says this level of change would have otherwise occurred over a far lengthier and drawn out period of time. 

Based on historical uptake, Christchurch has enough land supply to last the next 25 years. But with increasing building costs eating into developers’ bottom lines, there will be no capacity to pay significantly above current prices for the ample supply of land available. Tenants contemplating new premises have numerous options for development, with a variety of industrial subdivisions competing for their business, offering freehold bare land, design/build and leasehold options. 

The report indicates that vacancy will not be a concern for standard A and B grade space however very large premises, older C and D grade buildings as well as buildings with a NBS rating below 67% are likely to struggle as tenants shift toward quality space, as seen in the post-quake environment. 

Chris Harding, head of agency JLL says, “Due to the effects of the earthquakes a definite east to west shift occurred as tenants moved from uncertain land conditions, insurance issues and damaged building to more stable western suburbs, this is now also where a significant proportion of the worker population has migrated.” 

“The west is now becoming the heartland of Christchurch’s industrial precincts as tenants are seeking modern premises with minimal earthquake damage and excellent transportation linkages to the new and planned motorway improvements.”

JLL’s recently conducted vacancy survey indicated that overall vacancy in west Christchurch sits well below market level at 1.91%, with total vacancy for Christchurch industrial at 3.4%.

The future of the sector will be focussed around the western precinct which houses the large tracts of greenfield land ready for development. The west has the greatest access to Christchurch’s key transportation linkages and arterial industrial routes and the existing buildings are the best in the city with a prevalence of new and modern premises with higher stud heights and accessibility. 

A key to the continued performance of Christchurch’s industrial sector will relate to its ability to attract capital from foreign investors but with the new building activity bringing large scale assets with attractive price points, JLL expect a high level of outside interest in the Christchurch industrial market in the next year.