Mackersy Property & Cardinal Logistics – a partnership for a solid industrial investment

Industrial property has been the darling of the New Zealand commercial property market for the last ten years, driven in part by the rise of e-commerce online sales fuelling the increased need for warehousing and logistics fulfilment spaces. Investing in industrial property offers numerous benefits for both seasoned and new investors, often providing the most consistent long term returns due to industrial property’s lower vacancy rates and higher demand.

Mackersy Property has a strong history of funding and developing industrial warehouses for one of the country's leading logistics operators, Cardinal Logistics. Cardinal was founded by Tony Gorton in 1992 and now boasts an expansive network throughout New Zealand with a team of over 500 people. Today, Cardinal’s focus on cutting-edge technology and purpose-built infrastructure is key to its commitment to its partners, driving better outcomes for customers, clients and communities.

With history across multiple tenancies and a strong focus on innovative property, it was natural that Mackersy Property and Cardinal Logistics partnered for another project in Drury, Auckland – the most exciting yet!

The project
Mackersy Property is thrilled to develop New Zealand’s first 29m high, fully automated state-of-the-art logistics warehouse in Drury South Crossing, South Auckland.

Globally, the warehouse automation market is forecast to grow from US$19.2 billion in 2023, at over 15% per year between 2024 and 2034, to around US$95.45 billion¹.
A 29m stud height and warehouse space comprising 15,300m² of a 22,437m² freehold site area gives space to nearly double Cardinal’s pallet capacity through the use of a state-of-the-art fully-automated Daifuku racking system.

The $110m project is expected to be completed in April 2025.

To see how the facility will revolutionise logistics, click here to view the Cardinal Logistics Drury information video here.

The location
In Auckland, the industrial market has experienced significant growth, with rents rising by 10% in the past year. This surge is fueled by the low vacancy levels and high development costs, which drive up new build rents and make investments in such industrial properties especially profitable.

The Cardinal Logistics property itself is located in Drury, thirty minutes south of Auckland city and with direct access to the City, Port and Auckland International Airport. 

Ideally positioned in the “Golden Triangle” of Auckland, Tauranga and Hamiton, the location contains 50% of New Zealand’s population and sees the facility ideally positioned to service the forecast population growth of this area.

The lease
Commercial property such as this in Auckland is a solid investment, largely because of longer lease terms, which provide a steady and predictable income stream.

A strong investment by Cardinal and an initial lease term of 38 years sets a solid base for a lucrative long-term investment. The net annual rent of $6,555,000 plus GST is supported by fixed rent increases of 5% in the first five years of the lease term, with 3% fixed increases from year six. All repairs and maintenance (other than structural or weather tightness matters) are paid for by the tenant.

The offer

Savvy long-term wholesale investors will receive projected monthly distributions of 6% (gross) during development and on completion of the project, with a projected IRR of 10% (five-year average).

The strength of a tenant like Cardinal Logistics in locations that are prime for warehousing, particularly logistics warehousing, has proven to be a solid investment for Mackersy Property investors.

One example is Cardinal’s large-scale logistics facility in Christchurch’s Waterloo Business Park, which saw a significant extension and adjacent land purchase in 2019. In addition to securing an extended lease term with an expiry in 2054, the value of the property increased by 29% in the first five years of ownership.

Conclusion

Investing in industrial property in New Zealand offers numerous advantages, including higher income potential, strong capital growth, and a hedge against inflation. With attractive average returns and the potential for high ROI, industrial properties are a smart choice for investors looking to diversify their portfolios. 

If you're considering investing in industrial property this is a great guide. For more information, read this guide to commercial property investment in New Zealand.

Mackersy Property investments are open only to Wholesale Investors under the Financial Markets Conduct Act 2013. Read more information on qualifying as a Wholesale Investor here or contact us to discuss your circumstances.