Archive | Industrial

Moricz says sharp drop in industrial leasing a timing issue not market cooling

A sharp drop in leasing of new top-grade industrial property in Auckland represents a short-term timing issue, not a cooling market, CBRE Research senior director Zoltan Moricz says in the consultancy’s latest market outlook.

“Of the 100,000m² of new supply completed in the first half, about a quarter was in 3 speculative developments that were all available for lease at the end of June.”

Mr Moricz said overall vacancy tightened slightly, from an already low 1.7% to 1.6%.

“The vacancy decline would have been stronger had all newly built prime space been taken up. However, the timing of the latest new speculative supply meant that some of this was not taken up at the time of our survey, which pushed up prime vacancy as at June.

“The strong underlying demand for industrial space is manifested in 2 of the recently completed speculative developments coming under leasing contract since our June survey cut-off.”

Mr Moricz said that, at first glance, industrial headline figures for the first 6 months of 2017 suggested a cooling Auckland industrial property market: “After a couple of years of continuous growth, overall demand for space decreased by 22% compared to the second half of last year, and prime quality vacancy increased from 1% in December to 1.6% at the end of June. But a closer look at the details reveals there is no significant slowdown in occupier demand, and the above changes are essentially caused by the timing & composition of the latest new supply.

“Continuously strong occupier demand is most evident from the amount of secondary grade & pre-existing prime grade space that has been taken up in the first half of 2017.

“As the chart illustrates, leasing activity in these 2 categories was slightly more in the last 6 months than in either the first or second half of last year. Moreover, there were some sizeable secondary grade premises taken up by the market, with the average size of the 10 largest leases being about 8000m².

“Active occupiers in this segment of the market include large manufacturers such as Lion & Cottonsoft, and major retail businesses like Bunnings & My Food Bag. The pre-existing grade A segment was also dominated by the manufacturing sector (Fisher & Paykel, Visy) as well as logistics service providers (PFL Cargo, NZ Post), with the manufacturing sector accounting for 32% of overall activity and logistics 28%.”

Mr Moricz said the chart also made it clear that it was the volume of relocations & expansions into newly completed buildings where the first half of 2017 lagged behind previous half-year periods.

He said overall new supply in 2017 would be less than in 2016, “which is not entirely surprising given the record amount of new completions last year, including one of the largest industrial buildings in the Auckland market (Sistema Plastics Ltd’s 52,000m² facility near Auckland Airport)”.

CBRE’s forecasts indicate industrial supply should remain at about 200,000m²/year for a few years.

Attribution: Agency release.

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CBRE sees 1.2% reduction in Wellington industrial vacancy

CBRE counted 176,693m² of vacant industrial space in the Wellington region at December 2013, down 26,230m² over the year. That included 11,218m² of lower-grade space that was withdrawn from the market, 8860m² of it to make way for the 8000m² Masterpet development at 143 Hutt Park Rd.

The vacancy rate for the region fell from 9.6% a year ago to 8.4%.

Link: CBRE Marketview, Wellington industrial

Attribution: Agency release.

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400,000m² of warehousing taken up over 6 months

220 industrial occupiers took up nearly 400,000m² of warehouse space in Auckland in the second half of 2013, according to CBRE research.

100,000m² of new stock was added in the second half to the 82,000m² built in the first half, the biggest annual addition to supply since 2007, and another 258,000m² is under construction this year.

The rise in construction lifted vacancy, at least temporarily, from 3.5% to 3.8% in the second half of 2013. CBRE research director Zoltan Moricz said prime effective rents rose slightly after virtually no change for 2 years, as incentives were reduced in some suburbs. Rents for secondary space continued to increase, reaching their mid-cycle level. Prime yields were unchanged and secondary yields firmed only marginally.

The largest new industrial development completed & occupied in the second half was the 22,000m² Cardinal Logistics warehouse in Wiri. Frucor moved into its new 17,500m² warehouse there in the first half of 2013 and The Warehouse’s 23,000m² development in Wiri will be completed in the first half of 2014.

Other recent developments include logistics firm Mondiale’s extension at the Airport and the new Hydraulink & AA Insurance centres in Penrose.

A number of buildings were withdrawn from the industrial stock in Mt Wellington, due partly to demolition to make way for the Ameti (Auckland-Manukau eastern transport initiative) infrastructural development and also for conversions to commercial use.

The busiest development suburbs are the airport, with new buildings for DHL & LSG Sky Chefs (Lufthansa), and East Tamaki, where Goodman Property Trust alone is building 34,000m² of new industrial space at Highbrook.

Attribution: Agency release.

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Signs of industrial vacancy easing

Published 5 March 2010

More than 650,000m² of warehouse & factory space around Auckland is lying empty, but Colliers research & consulting director Alan McMahon said this week there were signs the vacancy rate was easing.


“In 12 months, vacancy overall has jumped from 4.8% to 6.7%, but the rate of increase is slowing – 6 months ago it was 6.4%. Already vacancy in some precincts is reducing. We have commented before that industrial is the property asset class that tends to recover first after a downturn, and we think we are seeing signs of that now.”


Colliers’ researchers monitor more than 10 million m² of Auckland industrial property in many precincts, and find significant variations between them: “Manukau is the engine room of te region’s industrial market, with 3.8 million m² monitored, and still has the lowest vacancy of the 3 cities (Manukau, Auckland, North Shore), despite increasing from under 3.8% to 6.3% in the last year. There has been very little new supply, so the increase in vacancy can be largely attributed to businesses downsizing or leaving their premises.


“The North Shore market is mixed, with reductions in Mairangi Bay & North Harbour contrasting with an increase in the Wairau Valley.


“In Auckland City, the central areas of Mt Wellington & Penrose/Onehunga both increased to over 7%, the first time that has occurred for over 7 years, but Rosebank/Avondale to the west declined markedly for the second consecutive 6-month period and is now at 3.9%, the lowest vacancy of all precincts.”


Mr McMahon said vacancy was steady in the Manukau/Wiri precinct, but substantial increases were recorded in East Tamaki (up from 4.8% a year ago to 6.7%) & Airport Oaks/Mangere (up from 5.6% to 9%).


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Attribution: Agency release, story written by Bob Dey for the Bob Dey Property Report.

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Auckland industrial values up 2%, Wellington’s 3.1%Auckland industrial values up 2%, Wellington’s 3.1%

Published 21 April 2006

Capital values for prime industrial properties in Auckland rose by 2% and rents by 1.9% in the March quarter, Colliers International research & corporate services director Alan McMahon said in the consultancy’s April market report. Click thumbnails to enlarge.

In Wellington, a similar rental index rise combined with a slight firming of yields produced an increase of 3.1% in Colliers’ capital value index.

Mr McMahon said logistics & trading companies were among the most active tenants.

Macquarie Goodman secured Kimberly-Clark for the remaining 9860m² of warehouse & office space at its Auckland Distribution Centre in Wiri. Macquarie Goodman has leased a 7882m² purpose-built warehouse & distribution centre at Westney Industry Park, Mangere, to specialist carrier DTC Holdings Ltd.

At Airport Oaks, Auckland International Airport Ltd has leased a new 7280m² design-build industrial property in Airpark Drive to NZ Van Lines Ltd.

Mr McMahon said the sale of Fisher & Paykel Finance’s 3821m² head office in Highbrook Drive, East Tamaki, to Kiwi Income Property Trust confirmed the continuing bullish nature of the investment market. The price of just over $13 million showed an initial return of 7.68%. Fisher & Paykel has taken a lease back for a minimum term of 10 years.

In Wellington, Property For Industry Ltd has bought 50 Parkside Rd in Seaview for $4.8 million on a 9% initial yield, with a lease in place to AllBrite Industries Ltd.

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Attribution: Colliers report, essentially not altered. Click thumbnails to enlarge graphs.

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