Penrose has the tightest conditions with vacancy sitting at just 1.4 per cent. Photo / Supplied
Penrose has the tightest conditions with vacancy sitting at just 1.4 per cent. Photo / Supplied
Auckland industrial vacancy rates are holding at historically low levels as demand for space continues to outpace new development, says Bayleys Research in its latest overview of the Auckland industrial market.
The latest Auckland industrial accommodation survey conducted by Bayleys Research shows the overall vacancy rate across the region's largest industrial precincts to be sitting at just 2.8 per cent.
"The latest figure is all but unchanged from that recorded in 2017 and 2016 despite the increase in new construction activity, reflecting the high levels of business growth and expansion within the region," says Ian Little, manager of Bayleys Research. "This is generating continuing strong demand for industrial premises from both tenants and owner occupiers.
"With tight market conditions persisting, we expect industrial rents to face further upward pressure, strongly underpinning capital values."
Unsurprisingly, Little says, there has been a significant response from the development sector to the supply demand, with the total floor area of new building consents issued for industrial premises topping 320,000sq m for the second time in three years.
"While development activity still lags behind what was apparent prior to the Global Financial Crisis, high demand for space and the opening of new industrial precincts, supported by new roading infrastructure, is likely to see construction activity holding at elevated levels for the remainder of this year."
Compared with 2017, Bayleys Research's survey results show that vacancy has fallen across the Airport Corridor, East Tamaki and Mount Wellington precincts. The rate was unchanged within the Rosebank Rd industrial area while there were small upward movements in Penrose, from a low of less than 1 per cent last year, as well as Wiri and the North Shore.
The vacancy rate for East Tamaki, the region's largest industrial precinct, fell by about half from 7.1 per cent to 3.4 per cent. Little says this decline was, in part, due to the temporary removal from the survey of the former Lion Breweries site in Springs Rd. Owner NZX listed property group Stride has plans to redevelop the site with works to include the demolition of the existing site structures to make way for a purpose-built 8285sq m industrial facility for Waste Management.
Following the completion of the redevelopment (targeted for the quarter ending September 2019), Waste Management will commit to a 25-year lease with an initial net rental of $3.89m per annum and structured rent growth.
Little says few large-scale vacancies remain within the East Tamaki precinct with a majority of units available to lease being less than 400sq m.
The Airport Corridor's vacancy rate now sits at 1.5 per cent and has halved since 2015 when it was 3.1 per cent. This reduction has been achieved despite the fact that the precinct has experienced significant development activity, says Little, with the total floor space within the area surveyed increasing by over 29 per cent.
Much of the development in the precinct has been driven by the Airport company itself. Over recent months it has completed a new 6000sq m building to accommodate the Ministry for Primary Industries and a new 7000sq m warehouse and office facility for international freight forwarding specialist Röhlig Logistics. In addition construction of a new 20,000sq m distribution centre, to be occupied by Bunnings, has also been progressed.
Penrose continues to have the tightest conditions within the major Auckland precincts, with vacancy sitting at just 1.4 per cent. The latest figure is up marginally on 2017's figure of 0.7 per cent due to the relocation of two tenants.
The precinct with the region's highest vacancy rate is Wiri where the latest figure is 7.6 per cent - up from 5.1 per cent a year earlier. This upward movement is predominantly, the result of the departure of tenants from 70 Kerrs Rd and Honda NZ's move from 105 Wiri Station Rd which left two large scale vacancies. The new owner of 105 Wiri Station Rd is undertaking an upgrade of the property for a new tenant.
On the North Shore, the supply of industrial premises within the Albany Basin remains tight despite vacancy lifting from the 1.3 per cent recorded in Bayleys Research's 2017 survey to 2.1 per cent.
Ian Little, manager Bayleys Research - for use dependent on space.
