Auckland, 26 April 2016 - Latest research by CBRE New Zealand shows that the industrial property sector is leading market activity across Wellington and Christchurch, as Auckland’s traditional industrial zones spread further south.
Gergely Gaspardy, Occupier Research Manager for CBRE New Zealand, says that the latest MarketView reports for New Zealand’s main cities show that industrial properties are generally showing declining vacancies, while a healthy pipeline of new developments are meeting occupier demand for high quality premises - for now.
INDUSTRIAL BRIGHT SPOT FOR WELLINGTON
Mr Gaspardy says prime industrial vacancy almost halved in Wellington in the second half of 2015.
“Several movements drove vacancy levels down from 7.2% to 3.8% in 2015, including the occupation of 11 Barnes Street, Revera’s purpose-built data centres, and the occupation of 2,080sqm by the Woodward Group at 12 Centennial Highway. Secondary stock also saw a positive demand environment, with numerous locations recording positive absorption in excess of 5,000sqm.”
He says that in addition, high occupier demand for industrial stock is outgrowing existing supply, which is likely to mean that static land values will soon increase.
“Wellington’s industrial land values have been static at $243psm, as there has been a significant supply of undeveloped land available. However, new developments are now expected to come to the market as high occupier demand outgrows existing supply, and the possible demolition of 58 industrial properties across the Wellington region is likely to lead to a shortfall of stock for occupiers.”
INDUSTRIAL SHINES IN STRONG YEAR FOR THE CANTERBURY MARKET
Mr Gaspardy says that the industrial sector in Christchurch was a stand-out for the commercial property sector last year, across a number of measures.
“The level of consented floor area in new industrial buildings ramped up in the fourth quarter, reaching its highest annual level in the past five years. Similarly, the investment market for industrial property was buoyant in 2015, with the number of transactions above $5 million doubling and the value of sales increasing threefold.”
Mr Gaspardy adds that whilst syndicators have been particularly active in the Canterbury industrial market, private New Zealand-based investors remain a driving force for the region.
AUCKLAND’S INDUSTRIAL ZONE STRETCHES SOUTH
Mr Gaspardy says that right across Auckland, Prime quality options for occupiers are limited, despite a healthy supply pipeline, which saw more than 300,000sqm of new space added to the market in the last 18 months.
“In addition, due to the strong market demand for good quality premises, available Prime quality space rarely remains vacant for more than a few months. As a result, take up of Secondary grade stock is increasing, but even those options are now reducing.”
Mr Gaspardy says Auckland’s most dynamic industrial sector is logistics, taking up around 75,000sqm of Secondary grade space in addition to the more than 100,000sqm of Prime quality space in the past year.
“Despite still healthy demand from logistics operators, the lack of large format quality options in the central suburbs of Mt Wellington and Penrose has pushed take up of industrial premises further south.”
Mr Gaspardy says new benchmark occupancy levels for key South Auckland areas are expected to provide an increasing emphasis on more outlying, emerging industrial locations such as Takanini, Papakura, Drury, and Pokeno, which provide lower occupancy costs options.
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