Overall vacancy across the Auckland South precincts rose slightly over 1H20, now sitting at 1.6%. The largest change was experienced in the Airport Corridor and Mangere precinct (up from 1.2% to 2.9%). The East Tamaki and Manukau/Wiri precincts both experienced a slight fall in vacancy though to 1.1% and 1.0% respectively. There are noticeably fewer tenants seeking space than in previous quarters but demand remains. As a result oﬀered incentives increased slightly and shorter lease terms were agreed.
The Auckland South Industrial precinct continues to see the most active development pipeline by a significant margin. The Mangere and Airport Corridor areas in particular have remained popular for new development, with a number of projects underway by Auckland International Airport and Goodman among other developers. Looking forward, we expect projects that are currently under construction will likely go ahead as they typically have pre-committed tenants. However, completion dates are expected to push out slightly given delays during COVID lock-down.
Rents remained stable across both the prime and secondary markets in 2Q20. Average prime rents continue to sit at $167 psm, with average secondary rents remaining at $131 psm. Average prime yields remained at 1Q20 levels of 4.94%, while average secondary yields rose to 6.00%. This represents ranges of 4.63% to 5.25% and 5.50% to 6.50% respectively. Average incentives also rose over the quarter. Prime incentives rose to 3.3% from 3.0% in 4Q19, while secondary incentives rose from 4.2% to 6.3%.