A sharp rise in building consents for industrial property in Christchurch signals the growing bullish sentiment among developers, investors, and owner-occupiers in the stellar performing sector.
Sam Staite, Director of Industrial at Colliers Christchurch, says while new industrial development remained relatively subdued in 2024, a significant uptick in consents in the second half of the year augurs well for 2025.
“In the six months to December, consents were issued for 137,105sq m of new industrial space – that’s 45 per cent higher than in the six months to June and the second-highest rolling six-month total since December 2022,” Staite says.
“With 118,727sq m already under construction, the general sentiment from contractors and suppliers is more upbeat than it has been over the past year or so.
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"Most of the product is pre-leased and design-built, and a lot of it is for expansion so we don’t anticipate an equivalent increase in vacancy.
“For instance, I’ve recently completed a new design-build-lease in the Christchurch Airport precinct to a high-tech manufacturer, which is building for their business growth.
"The building consent was issued in January and now construction is underway on the 9,000sq m-plus facility on a prime 1.5ha block of land in Dakota Park.”
In the past year, leasing options were supplemented by an increase in sublease opportunities, particularly within large-scale logistics facilities. Some of these larger tenancies have now been soaked up, which has eased the vacancy rates.
“One such large-scale lease was the former DHL space in Seymour Street totalling over 9,000sq m, which we leased to Foodstuffs on a long-term agreement at the end of last year.
"Another facility, measuring approximately 5,000sq m, is being negotiated at the moment and will further reduce vacancy once complete,” Staite says.
He expects continuing strong demand for smaller premises such as those below 1,500sq m.
This year, the Colliers team has already negotiated dozens of industrial leases and the general enquiry is picking up.
Staite says surprisingly there wasn’t a huge increase in vacancy across the smaller end of the market, despite these businesses typically being the first to feel the pinch of an economic downturn. Given this, vacancy levels in smaller premises have remained low and rents have held up well.
Research in the Christchurch market conducted by Colliers shows investor appetite for industrial assets remains strong, with both prime grade and lower-value secondary stock attracting high demand.
- Supplied by Colliers
