Despite an extended period of trading restrictions, Auckland’s industrial leasing market has remained active, continuing to reduce space availability. The overall vacancy rate is projected* to have fallen in the six months to August 2021 to 1.9%, from 2.2%. Pressure is particularly acute at the prime end of the market with leasing options becoming increasingly limited, driving design-build and speculatively-led new build activity.
Colliers is monitoring approximately 243,100 sqm of industrial space under construction in Auckland, amongst the largest pipelines recorded over recent years. StatsNZ consent issuance for industrial premises over the year to September 2021 reached 383,615 sqm, up 16.5% on the year prior. While still behind peak levels seen in 2018 and 2019, this is well ahead of the 10-year average of 308,520 sqm.
Interest rates are increasing from record low levels, and the Reserve Bank of New Zealand has signalled further increases in the OCR over the next 12 months. Industrial property remains extremely sought after from investors and owner-occupiers, but rising interest rates in 2022 are likely to dampen the level of yield rate compression we have experienced in recent years.
*Generated from a partial physical survey and a desktop analysis due to Auckland Alert Level lockdown restrictions