Colliers International has just released their latest New Zealand Industrial Market Indicators report.
After stalling in late 2007, the industrial property engine is running again, but only in first gear. Market conditions in the industrial property sector mirror conditions in the other non-residential sectors. Falling rents, rising incentives, stabilising cap rates, glimmers of development activity, robust private equity investment, and the absence of institutional or public equity, are the themes. It has always been a truism that quality property outperforms secondary property over time, but this has seldom been so clearly evident as in the last twelve months in New Zealand’s industrial property markets.
Although the same themes apply around the country, the three main centres are at different stages of the cycle and reacted very differently to the downturn in tenant and investor demand over the last two years.
There are several indicators of future industrial property demand. The BNZ Capital, Business New Zealand Performance of Manufacturing Index shows manufacturing neither expanding nor contracting, and on a generally upward trend, which is better than most of the last two years.
Industrial investment parcels are often smaller, and less complex than office or retail property counterparts, and it is not surprising that this asset class has seen the quickest recovery in investor demand. However, there are many older buildings to lease or for sale, but little demand, while there are very few modern large buildings for sale as investments, which is what private investors are keen to buy.
It will take a year or two more to mop up these excess properties. Their buyers or tenants will typically be cost-conscious small businesses, who are suffering substantially at present. We are likely to see an increase in the overall vacancy rate in the next twelve months in all centres despite an increase in demand for new buildings and a re-commencement of development on a modest scale.
Click here to read the full report in PDF format
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Sales,
Office Leasing,
Retail,
Industrial,
Character Space,
Valuation and Advisory Services,
Corporate Solutions,
Research & Consultancy,
Auckland Office,
North Shore Office,
South Auckland Office,
Wellington Office,
Christchurch Brokerage,
Dhilan Balia,
Alan McMahon