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Wellington Industrial Report | Second Half 2021

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The latest overall vacancy rate is now at 2.0% compared with 2.4% recorded a year ago, highlighting a buoyant, but constrained market, typically as a result of the ongoing lack of supply. Vacancy remains well below the 10-year average of 3.8%. 

 

Tighter market conditions have led to an increase in development activity. A variety of smaller owner-occupier products in industrial estates to large scale warehouse premises are under construction. Colliers are currently monitoring 39,111 sqm of industrial space under construction, one of the highest levels of activity on record. Consent data from StatisticsNZ shows an annual average floor area of 36,300 sqm has been issued annually over the past two decades, with 49,847 sqm consented in the year to October 2021. 

 
Rental growth continued over the second half of 2021, and tight market conditions will likely result in further rent rises. Rising labour and materials and the competition for appropriately zoned industrial land are adding to development costs, which are increasing rents for new-build activity. However, the higher rates are testing businesses and their ability to pay higher occupancy costs, especially in a high inflation and rising interest rate environment. 
 
Interest rates are increasing from record low levels, and the Reserve Bank of New Zealand has signalled further increases in the OCR ahead. Industrial property remains extremely sought after, but rising interest rates in 2022 are likely to dampen the level of yield rate compression we have experienced in recent years. 
 
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Wellington Industrial Report | Second Half 2021

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Related Experts

Jeremy Simpson

Director

Wellington (Valuation)

Jeremy joined Colliers International (Wellington Valuation) Limited in 2006 as a Senior Valuer. He was appointed Associate Director in 2011.  As of April 2014 Jeremy became a Director and Shareholder in the Wellington valuation franchise.  Jeremy undertakes all types of valuations of commercial and industrial properties around the Wellington Region.

With over 27 years in the valuation profession he is experienced in a wide range of valuation and consultancy work.  Initially involved in residential valuations, he is now focused on commercial & industrial properties including market valuations, rental reviews and insurance valuations.
 
Jeremy has gained specialist expertise in the valuation of self storage facilities, childcare centres and land subdivisions. He has also developed a strong knowledge of the Wellington Industrial market.

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Tim Julian

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Tim’s areas of expertise are:

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•       Negotiation

•       Development

•       Documentation

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Tim commenced work as a valuer upon graduating in 1983. He worked in a range of management roles with Prudential from 1986 finishing as Associate Director-Property in 1995. Development and Consultancy 1995/1996 and Agency from 1996.

 

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Chris Dibble

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Chris Dibble is currently a Director of Strategic Advisory and has held a variety of leadership roles at Colliers over the past eight years.

With over 16 years of experience, Chris uses data-driven property insights and pragmatic advice to arm people with the necessary information to make the best possible decisions.

Chris is also a regular presenter at industry events, as well as frequently featuring in New Zealand’s media discussing the latest property market trends.

 

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Ian Little

Associate Director | Research

Auckland CBD

My Colliers priorities focus on supporting the New Zealand network through the provision of research and thought leadership reports, articles and presentations. I draw on over 30 years of experience in the property market, gained in both the UK and New Zealand to my role enabling me to assist a broad range of clients and internal stakeholders. I am a member of the Royal Institution of Chartered surveyors. I am a regular presenter on current market conditions and future trends to the media, clients and various interest groups.

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Thomas Smeed

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Thomas's role within Colliers consists of undertaking market research across both the commercial and residential sectors to aid in the preparation of market reports. Being responsible for the handling of a number of core databases, his work is used in providing analytical support for a range of solutions, both within the organisation and externally. As a current student, Thomas's academic studies in Property and Marketing  allow him to bring a well rounded approach  to his role. 

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