The North Shore industrial vacancy rate increased from 1.4% to 2% with rents beginning to rise again.
Total vacancy in the North Shore industrial areas remains structurally low in 4Q19, indicating a continuing trend of strong demand for North Shore industrial space. Overall North Shore vacancy currently sits at 2.0% in 2H19, up from a record low of 1.4% in 1H19.
Silverdale was the only market to see a fall in vacancy this half, down to 1.7% from 3.0% recorded in our June vacancy survey. Vacancy in both the North Harbour and Wairau Valley areas has risen to 2.0% from 1.1% last half, and vacancy in Rosedale rose from 1.6% in 1H19 to 2.1% in 2H19.
New supply in the Wairau Valley and North Harbour areas remains limited due to zoning constraints and a lack of greenfield land. Silverdale continues to be the largest contributor of new supply in the sector with just under 20,000 sqm of space currently under development, and more in the pipeline at various stages of planning and consenting. New build activity continues in the Highbrook Business Park with 6 Emirali Road and 28 Waterloo Road currently under construction, and B/30-35 Highgate Parkway currently in planning but set to provide around 9,500 sqm of space on its completion. Overall, the number of new projects entering the pipeline has continued to slide from 2018 and this trend is expected to continue as a result of inflating construction and land costs.
Rents have begun to rise again across the North Shore industrial markets. Prime yields now sit at $164 psm, up from the $158 psm recorded over the last two quarters. Secondary yields have also risen to $140 psm from the $134 psm observed since December 2018.
Though the average prime yield remained stable this quarter at 5.13%, secondary yields have continued to fall, and now sit at 5.88%, down 0.25% from 6.13% in 3Q19. Both markets, however, have continued to exhibit cycle low yield levels this quarter.