- Sourcing appropriate industrial leasing opportunities is becoming increasingly challenging as Wellington’s industrial vacancy rate reached an all-time low of 0.9 per cent in the November survey. This represents only 23,000 sqm of available space, down from 39,000 sqm a year ago.
- New supply remains limited and is unlikely to significantly alleviate demand pressures. Annual building consent data for the year to October was 25,700 sqm, close to the annual five-year average of 24,000 sqm per year.
- Wellington region’s highly competitive market and low interest rates continue to push up rents and push down yields. Average gross prime warehouse rents have lifted 7.0 per cent in the past year, from $133/ sqm to $142/sqm in the Q3 quarter. Average prime yields firmed 45bp to 7.06 per cent in Q3 2019 when compared to a year ago, while average secondary yields firmed 20bp to 8.50 per cent in Q4 2019.
- Colliers International Q3 2019 investor confidence survey showed a net positive (optimists minus pessimists) 51 per cent of respondents expected investment decisions to improve in Wellington’s industrial sector over the next 12 months. This is up from a net positive 41% in the September 2018 quarter.
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