Occupier demand for vacant industrial land remains strong across the Auckland region despite the ongoing economic headwinds.
The bigger challenge for those seeking sites for development is a distinct lack of supply, which has been evident for the past decade.
With many of the greenfield developments all but built out, occupiers and developers are now looking for their next opportunities. Much of the industrial freehold land offered for sale in Drury has also been purchased at a rapid rate.
The 361ha Drury South Crossing business park will eventually be home to a host of well-known national brands, including Mitre 10, Plumbing World, Bunnings, Cardinal Logistics, and Bidfood.
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Greg Goldfinch, National Director of Industrial at Colliers, says there’s a range of key players in the market seeking space for development.
“Across Auckland there is a drastic shortage of freehold industrial land, which poses considerable challenges for businesses looking to expand their operations. Previous forecasts have suggested that South Auckland could face a shortfall of industrial land of more than 900ha,” Goldfinch says.
“While we may be operating in a changing economic environment due to rising interest rates and building costs, any available land we have brought to the market recently has generated strong interest and is keenly snapped up.
“This includes sites from 2,000sq m to large-scale holdings that span up to 10ha, there is simply not enough supply to meet the demands of the market.”
Goldfinch says owning land presents organisations who may be targeting growth opportunities with future options.
“The chance for a business to acquire its own site will always hold appeal given it allows them to be masters of their own destiny and not be bound to a lease.
“There are active buyers in the market across listed funds, institutional owners, and investors who are all eagerly looking for their next opportunity to acquire a major greenfield development site if one was to become available.”
Data from the Colliers Research team notes the rapid increase in industrial land values between 2017 and 2021 as demand took off, significantly outpacing supply, with prices reaching an average of approximately $1,400 per square metre in certain parts of Auckland.
Josh Coburn, Director of Site Sales at Colliers, says developable sites in central locations are incredibly hard to come by and current landowners have reaped the rewards.
“There’s a range of opportunities to lease land in the market but still not enough purchasing opportunities and Auckland needs further land freed up for industrial use as the population continues to grow,” Coburn says.
“Land remains tightly held among institutional investors and major players in the sector.”
Coburn sold more than $350 million of development land in 2022 alongside Colliers Director of Capital Markets Blair Peterken who says the supply issues are not only limited to South Auckland.
“The ongoing development and sprawl across West Auckland and to the north has further added to the challenges to free up industrial land,” Peterken says.
The lack of available space across the city has prompted buyers to look further afield and expand their search parameters. This has led to industrial land in Waikato drawing notable interest during the past two years.
A key example of that interest is evidenced through bed manufacturer Sleepyhead selling their long-time premises in Ōtāhuhu as part of their plan to construct a $1.2 billion manufacturing and housing development in Ōhinewai in north Waikato.
- Article supplied by Colliers
