North Shore Industrial Market Snapshot Q1 2019
Vacancy levels in the North Shore are expected to remain low, supported by high demand and a constrained supply.
Industrial space in the North Shore remains in high demand following the continued expansion of the occupier footprint. We observed a decrease in vacancy across the market in 2H18 to 1.7%, from 2.3% in the first half. Vacancy was reduced in Wairau Valley and Silverdale, while there was a marginal rise in vacancy in both Rosedale and North Harbour.
Wairau Valley currently has the lowest vacancy rate at 1.2%, followed by Silverdale at 1.6%, Rosedale at 1.5% and North Harbour at 2.2%. Total vacancy now reflects just over 33,000 sqm of space. Vacancy levels are expected to remain low, supported by high demand and a constrained supply.
As industrial properties have continued to perform strongly, developers have acted to respond appropriately with new development. Despite stimulation to provide further supply, zoning constraints and a lack of readily available industrial zoned land is restricting a supply response, particularly in the North Shore market. New construction activity remains focused in Silverdale, with developers increasingly looking into the North-West (Hobsonville, Westgate and Kumeu) for additional opportunities
We observed a relatively static rental market in 1Q19. The average prime blended rent stayed at $156 psm and the average secondary rent remained stationary at $134 psm.
Yields also remained unchanged with the prime rate at 5.38% and secondary yield at 6.50%. We expect yields to remain low, as supported by strong investor interest and strong asset performance. The majority of investor interest remains focused on prime assets, however demand remains for assets with add value opportunity.