Rent growth subsides

• Rent growth is slowing as expected. Average combined net Prime rents per sqm per annum were at NZD 215, comprising warehouse NZD 193 and office at NZD 303. Rents were at NZD 222, 218 and 206 per sqm, for Auckland City, Manukau and the North Shore precincts respectively.
• Although the average incentive has remained at 8.0% and 6.3% for Prime and Secondary premises, respectively, since Q1 2024, the rise in vacant space may lead to landlords offering more incentives over the short term.

Calder Stewart announces key partnership

• In August, Calder Stewart announced its partnership with Wesfarmers Industrial and Safety to deliver their new North Island distribution centre for NZ Safety Blackwoods in Drury South. The new facility will span ~18,000 sqm and is scheduled for completion in H2 2025.
• In addition, Argosy is well underway with construction on the first of two warehouses at its strategically located Neilson Street site in Onehunga. The first warehouse, spanning 5,000 sqm, is on track for completion in January 2025.

Transactions over the previous two quarters totalled NZD 151.85 million

• There were NZD 151.85 million of Auckland Industrial transactions over the previous two quarters. One of the most significant transactions in Q3 2024 was the sale of 1, 3 and 7 Inlet Road, Papakura, for NZD 26 million.
• Other notable sales were 12 Parker Street, Papakura, for NZD 7 million and 121 Diana Drive, Wairau Valley, for NZD 6.10 million, with an initial yield of 5.15%.

Outlook: Market delivery response to be influenced by land availability and development constraints

• The increase in subleases and vacant space in the industrial sector observed in the past year will continue to assist occupiers seeking space. However, supply constraints are likely to remain due to land availability and development cost constraints.
• As economic conditions improve when interest rates fall, occupiers involved in logistics, e-commerce and supply chain management can anticipate higher order volumes and the need for larger storage spaces. This rising demand is likely to spur new construction activity.