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Auckland industrial vacancy eases but has likely peaked

Auckland industrial vacancy eases but has likely peaked

Auckland’s tight industrial market has eased slightly with the overall vacancy rate edging up, but current high demand for industrial space makes it likely that vacancy is at, or close to, peak levels.

Colliers International’s latest industrial vacancy survey found the overall vacancy rate increased to 2.1 per cent in the six months to September, up from March’s record low of 1.4 per cent.

Prime grade vacancy held steady at 1.2 per cent while the secondary grade sector saw vacancy increase from 1.6 per cent to 2.5 per cent.

Adrian Goh, Research Analyst at Colliers International, says the increases are likely to only bring temporary relief for occupiers.

“Given the current high demand for industrial space it seems likely that vacancy is at, or close to, peak levels.

“Tight market conditions have boosted confidence within the development sector, which is vividly illustrated by recent building consent data released by Statistics New Zealand.

“The value of industrial building consents in Auckland reached a record high of $115 million in August, which was surpassed in September when the total value of consents reached $119m. The combined value of these two months exceeded that of the previous six months combined.

“This spike in activity has propelled the total value of consents approved over the year to September to $615.9m.”

Goh says 213 consents were issued over the year to September, for a total floor area of 329,130sq m.

Despite the recent increase in overall vacancy, the current rate continues to sit below the 10-year average of 3.1 per cent.

The increase in vacancy equates to an additional 90,850sq m of stock becoming available for lease over the previous six months. Over the same period, a total floor area of 67,135sq m was added to the survey.

Of the 13 precincts surveyed, vacancy increased in nine. In the city’s largest precinct, East Tamaki, vacancy increased to 1.7 per cent from 1.2 per cent in February.

In Mt Wellington, vacancy increased to 2.2 per cent from 1.3 per cent, while within the Airport Corridor vacancy was steady, holding at just under 0.5 per cent.