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AUCKLAND INDUSTRIAL ANNUAL 2011

Vacancy Rates Fall During Development Hiatus

Industrial vacancy rates across Auckland, which climbed sharply during the recession, have begun to decline due to the combination of increased leasing activity and a hiatus in development activity.

This trend is clearly illustrated by the results of the latestBayleys Research survey of the Albany Basin industrial precinct.

Vacancy rates increased sharply as the economy cooled in late 2007 and throughout 2008, reaching nearly 10% at the date of the 2009 survey. The sharp rise was driven by the combination of companies contracting in order to cut costs, and a continued rise in inventory, as development projects commissioned in late 2007 and 2008 were completed.

Between the 2007 and 2009 surveys, total industrial floor area within the Albany Basin grew by approximately 79,600m² to reach 1,032,650m². Over the next two years, however, the increase was just over 8,500m² as the development pipeline was shut off.

The increase in vacancy rates caused by the rise in new space during the 2008/2009 period, was exacerbated as companies contracted or went out of business. This led to the total space occupied falling by approximately 7,000m².

Throughout 2009 and 2010 however, leasing activity increased resulting in the uptake of total occupied space increasing by approximately 23,000m².

Real estate agencies reports suggest that the uplift in leasing activity seen north of Auckland’s harbour bridge has been mirrored elsewhere in the region. The latter point is illustrated by the significant reduction over the last year in the number of premises of greater than 1,000m² being available to the market to lease within East Tamaki. The number according to agency estimates has fallen from just under 100 a year ago to less than 40 at the end of March.