The latest August 2019 industrial survey shows the overall vacancy rate remains low at just 2.1 per cent. Some options have become available with secondary vacancy rate increasing to 2.3 per cent from 2.0 per cent in August 2018.
Several infrastructure projects are on track to be completed over the next few years providing more opportunities for industrial tenants. There is currently 283,000 sqm under construction in Auckland, 172,000 sqm consented and a further 69,005 sqm in the planning and feasibility stages. Location continues to play a significant role in tenant demand as precincts located near main arterial routes such as the Airport Corridor are experiencing record high demand and record low vacancy rates.
Warehouse rental growth continues to track upwards due to strong market fundamentals and high levels of tenant demand. In Q3 2019, prime average warehouse rents rose to $134 per sqm, up from $130 a year ago. Secondary average warehouse rents rose to $113 per sqm, up from $106 a year ago. Auckland yields are sharpening as a result of confident investors and a low interest rate environment.
The 2Q 2019 Colliers International investor confidence survey found the Auckland industrial sector to achieve a net positive (optimists minus pessimists) score of 70 per cent, the highest recorded since Q2 2016. Over the past three years, the industrial sector has consistently achieved the highest confidence scores.