APPD Market Report Article


May 26, 2024

Gavin Read, Head of Research, New Zealand


NZD 215


Rent growth expected to subside

  • After two years of solid rent growth, which helped soften the impact of value corrections, the second half of 2023 saw a stabilisation in rents. For 1Q24, there was a marginal increase in the average net Prime rent per annum to NZD 215 per sqm (up NZD 1 per sqm) and the average net Secondary rent per annum to NZD 173 per sqm (up NZD 3 per sqm).
  • Industrial rent growth in 2024 is expected to grow at a slower pace than we have seen in the last 24 months. It is expected to grow by 2.5% y-o-y by December 2024, while it grew by 10.0% y-o-y during 2022 and by 8.3% y-o-y during 2023.

Vacancy increases by 100 bps y-o-y to 2.4%

  • Vacancy has remained low and stable for Manukau at 1.0%, with an increase for the City by 250 bps y-o-y to 4.4%, and a slight increase for the North Shore to 1.9%.
  • For Manukau, there were several significant leases in the last few months of 2023. These included 5,000 sqm and 7,000 sqm at Pavilion Drive, leased to Mainstream Logistics and Rhenus Logistics, respectively, along with 17,000-sqm at 9 Jerry Green Street, Wiri, leased to Synlait.

Yields thought to have reached peak, with Prime average at 5.38%

  • The Auckland industrial market had three notable transactions in 1Q24 worth NZD 27.90 million. This represents the lowest sales figures for a quarter in the last two years, in terms of both volume and value. For example, this market recorded NZD 146.72 million worth of sales during 4Q23.
  • A significant transaction was the sale of 313 Rosebank Road, Avondale, a 2,989 sqm property for NZD 15.25 million. Other significant transactions were the sales of 46 Miro Road and 103 Montgomerie Road, both in Mangere, for NZD 7.65 million and 5.00 million, respectively.

Outlook: Sustained demand expected due to ongoing population growth

  • In 2022, it was forecast that even the most conservative estimate of 1.0% population growth by 2025 would require an additional 1.1 million sqm of logistics and industrial space for New Zealand. This number will now need to be reassessed, given that the country’s net migration has been continually breaking records.
  • The latest figures for December 2023 show an increase of over 130,000 new migrants. With this being over 2% of our current population, it comes with both benefits and risks for the industrial and logistics markets.

Note: Auckland Logistics & Industrial refers to Auckland's prime logistics market.

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