Snapshots

North Auckland
industrial market
snapshot 2Q20

August 05, 2020
Demand

Overall North Shore vacancy increased 1.4% to 3.4% over 1H20 across all sub-precincts over 1H20. North Harbour experienced the largest increase, rising to 3.8% from 2.0%, closely followed by Wairau Valley, which rose 160 bps to 3.6%. Rosedale increased to 3.2% from 2.1%. Silverdale remained relatively stable overall however, only increasing 0.1% to 1.8%. There are fewer tenants seeking space than in recent quarters, which has seen tenants being able to negotiate shorter lease terms if needed.

Supply

With zoning constraints and a lack of greenfield land, new supply in the Wairau Valley and North Harbour areas remains limited. We are only aware of three projects currently under construction in the North Shore industrial pipeline. These projects combined will provide just over 15,000 sqm of space. As for the medium-term projects that are currently in planning, we expect the rate of these projects transitioning from the planning to construction phase to slow down. Limited supply is expected to keep vacancy levels low across the Auckland precincts.

Asset performance

Average prime North Shore industrial rents remained stable at 4Q19 levels of $164 psm over 2Q20. Average secondary rents fell from $140 psm to $138 psm over the quarter. Similarly, 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%.

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