Wellington industrial market snapshot Q1 2021
Wellington’s industrial market remained stable over 2H20 due to limited stock with net face rents increasing for both prime and secondary stock.
Wellington’s industrial market again remained stable over 2H20, with overall vacancy rising 10 bps to 3.1%. Very little fluctuation was observed within the precincts and vacancy remains historically low across the board. Although the market remains competitive generally, such low vacancy across Wellington continues to be compounded by extremely limited availability of redevelopment land in Wellington’s key industrial precincts and within a reasonable commuting distance into Wellington and to State Highway 1.
The only change to stock over 2H20 saw eight new units completed at 6 Hoffs Place in Porirua, increasing overall Wellington Industrial stock by a modest 489 sqm. With land and construction costs continuing to rise, and with land available for construction still very limited, the future supply pipeline for the sector remains bottlenecked. Two noteworthy projects entered the pipeline: The Quarter at 7 Tunnel Grove in Seaview, to be developed by Thames Pacific, and Imperial Park in Petone. The projects will respectively add 78 and 68 new commercial units to industrial stock upon completion.
Wellington’s industrial landlords presently continue to reap the benefits of limited stock and limited opportunity for industrial development within close proximity to key distribution nodes and the transport network. As such, net face rents continued their increase; up 4.4% to $167 psm among prime and 3.2% to $114 psm for secondary stock. The market story in 4Q20 has been the substantial yield compression for quality investments; an average gross yield shif of 56 bps for both prime and secondary assets. In addition, prime CVs rose 4.7% over Q4 to $2,654 psm.