Further Tightening in the Auckland Industrial Property Market
Sep 12, 2017
Further Tightening in the Auckland Industrial Property Market
Auckland Industrial property vacancy rates have constricted further to a new record low of 2.1%, down from 2.2% in 2016. This is despite the supply of circa 190,000 sqm of newly built industrial developments, reflecting that the ongoing supply is being absorbed and that there is sufficient current demand to limit any over-supply in the Auckland market. These results also reveal that there is an increasing demand for higher quality, large footprint buildings as over 80 hectares of land was absorbed in 2016.
Anecdotally with the shortage of warehouse space has come an increase in warehouse rentals with prime warehouse rates now being circa $120 psm and secondary warehouse rents rising 8.0% over the last year to circa $100 psm. With the limitation of sales stock, there has also been a further compression in yields with prime yields now in the 5.75% to 6.0% range and secondary yields around 7.0% to 7.25%. The outlook remains strong and new supply (some of it speculative) will continue in the next year.
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