Christchurch Industrial Market Snapshot Q3 2019
Demand for industrial stock in Christchurch has shown some stabilisation. The vacancy rate only increased by 10 bps from our 2H18 to 1H19 vacancy surveys, up to 4.9% from 4.8%.
Demand for industrial stock in Christchurch has shown some stabilisation. The vacancy rate only increased by 10 bps from our 2H18 to 1H19 vacancy surveys, up to 4.9% from 4.8%. All surveyed precincts saw a slight increase with the exception of the east Christchurch area (Bromley and Woolston), which saw a drop of 60bps. The count for total net absorption also shows signs of the market stabilising further, now around only a tenth of what was recorded at the end of 2018.
Christchurch’s total stock base has grown slightly over 1H19 with ~15,000 sqm added in the first 6 months of 2019. This figure is much less than what JLL has recorded in past updates, with the June 2018 statistic sitting at ~98,000 sqm versus June 2019 at ~15,000 sqm, indicating a significant slow-down in the supply response.
Developers will seek to mitigate oversupply issues and untenanted buildings by carefully selecting the projects they take on and building for specific tenant needs.
We have observed a slight uptick in the combined Christchurch industrial rental rates over the last quarter, with prime rents sitting at $117 psm and secondary rents at $86 psm, increases of 2.6% and 2.4% respectively from last quarter. There is little movement forecast for the rest of 2019 and into 2020 as new supply in the pipeline has slowed.
The average yields for the prime and secondary industrial sectors have hit post-earthquake lows this quarter. Prime yields are currently sitting at 6.23% and secondary yields at 7.13%, down 27bps and 37bps respectively from 2Q19 data.