Despite an extended period of trading restrictions, Auckland’s industrial leasing market has remained active, continuing to reduce space availability, according to the latest research from Colliers.
The overall vacancy rate is projected to have fallen in the latest survey to 1.9 per cent, from 2.2 per cent recorded in February 2021.
Chris Dibble, Head of Research at Colliers, notes pressure is particularly acute at the prime end of the market with leasing options becoming increasingly limited, driving design-build and speculatively led new build activity.
“Colliers is monitoring approximately 243,100sq m of industrial space under construction in Auckland, amongst the largest pipelines recorded over recent years,” Dibble says.
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“Statistics New Zealand consent issuance data for industrial premises over the year to September 2021 reached 383,615sq m, up 16.5 per cent on the year prior. While still behind peak levels seen in 2018 and 2019, this is well ahead of the 10-year average of 308,520sq m.”
The research also shows that warehouse rents have been on an upward trajectory with prime space now commanding an average annual rent of approximately $144 per square metre, an increase of just under 7 per cent over the year.
Greg Goldfinch, National Director of Industrial at Colliers, notes the upward movement on rentals experienced in the second half of 2021 is set to continue given tight market conditions and increasing inflationary pressures.
“We are already seeing a rise in the number of landlords looking to link rental increases to CPI and incorporate more frequent reversions to market levels in 2022, rather than sticking to fixed increases with caps and collars,” Goldfinch says.
“While interest rates are increasing from record low levels, which has the potential to dampen the number of record-setting prices achieved of late, industrial property remains extremely sought-after from investors and owner-occupiers. This will keep the sector’s popularity high and cement its top position for returns into the new year.”
- Article supplied by Colliers
