A Review of the Markets – May 2018
Strong demand for industrial and commercial property continues in Auckland and Viranda continues to see low stock pushing up rent and ensuring capital growth for clients.
Industry reports showed industrial vacancy across Auckland increased to 2.2% in February 2018, representing approximately 250,600m2 of vacant space – up from 1.9% a year ago. That demand is behind new speculative builds at Highbrook Business Park by Goodman.
Stock shortage also meant property sales dropped overall to $1.07 billion in 2017, compared to $1.66 billion in 2016.
Viranda predicts rents will continue to track upwards as Auckland’s industrial supply carries on a catch up game with demand, which in turn will encourage capital growth despite near record low industrial yield levels.
It feels similar on the North Shore, where the market shows vacancy rates at extremely low levels, across all sectors.
Zoning constraints are hindering new supply which will most likely lead to even more investment into refurbishment and redevelopment, the Datacom expansion in Rosedale is a good example.
As always there are exceptions to the rules, and the redevelopment of the Takapuna carpark at 40 Anzac Street is just that – the project commenced after a 13 to eight vote by the council’s planning committee despite opposition from the Devonport-Takapuna local board.
Locally, rent rises are likely to continue, which will likely influence the high number of owner occupiers.
Viranda anticipates property value will stay robust throughout the year, with rent increases supporting capital growth despite flattening yields. Perhaps a slower first quarter can be attributed to the change of government, and a cautious “wait and see approach” by stakeholders.