Auckland North Shore industrial market snapshot Q1 2021
Auckland North Shore City industrial was the only submarket to experience a decrease in vacancy in 2H20.
North Shore City industrial was the only submarket to experience a decrease in vacancy in 2H20 with a reduction in available space of 56bps from 3.4% to 2.9%. In the subprecincts, only Silverdale saw a rise in vacancy, up from 1.8% to 3.8% in 2H20. A fall in vacancy was recorded in the Wairau Valley, North Harbour and Rosedale. As in Auckland's other industrial submarkets, extremely low vacancy overall continues to be a result of scarcity of development land and available stock, especially in the prime end of the market, across the sector.
Auckland's northern industrial precinct continues to see limited development pipeline activity compared with the other submarkets. This continues to be the result of zoning constraints and a lack of greenfield sites in the area. All significant upcoming developments continue to be located in Silverdale, though we are aware of projects in Rosedale in the planning stages. With inflated development costs and projects requiring higher economic rents to achieve feasibility, we expect the rate at which medium term projects transition from the planning to construction phase will slow further.
North Shore industrial rents held up during 4Q20. Average prime rents in the submarket remained at 4Q19 levels of $164 psm, while average secondary rents remained at $138 psm for the third consecutive quarter. The tone of the market remains consistent with the narrative that there is a short-term equilibrium between supply and demand. Both prime and secondary yields have proceeded on a downward trend, firming over the quarter by an average of 19bps and 25bps to 4.75% and 5.75% respectively.