The latest New Zealand Industrial Market Update from Bayleys Insights & Data team reports that although there are residual economic and systemic challenges facing industrial occupiers and building owners, positive signs from the development sector point to more buoyant times ahead.

Commenting in the latest edition of the firm’s Total Property portfolio, Bayleys analyst Samantha Lee says overall industrial vacancy rates have edged up in recent months while rents have stabilised across most urban areas.

“Softer demand from logistics operators combined with slow decision-making and tightening of rental budgets by prospective tenants is contributing to a rise in industrial vacancy levels, however, a flight to quality is still evident among larger occupiers wanting to upgrade into better spec’d spaces in core locations.”

Investment sales volumes remain relatively muted with wide bid-ask spreads and lagging book values having an effect, and buyers may be facing some friction when looking to secure finance, says Lee. “That said, several recent sales of large assets signal a potential turning point, and a survey of our brokers around the country suggests investment market conditions are improving.”

Bayleys national director of industrial and logistics, Scott Campbell, says the industrial sector has proved to be a gutsy real estate performer.

“There’s some smart movement and strategy playing out as occupiers focus on the controllables like optimising layouts and operational processes for efficiency, seeking sustainability measures to reduce energy use, and giving more weight to amenities for the attraction/retention of staff.

“Sub-lease industrial space is starting to get soaked up as occupiers identify options to make their businesses more productive, while others are being clever with existing space to leverage cubic capacity.”

Several government announcements aimed at growing the economy will ripple through to the industrial sector, according to Campbell, with Investment Boost and the intention to allow more overseas building materials into New Zealand's construction sector of note.

Campbell says developers are proactively positioning themselves for the next upswing in the cycle with an encouraging pipeline of forward work, and Bayleys is fielding high levels of enquiry from development entities as they look to leverage the firm’s capability in the industrial sales and leasing arena.

National commercial/industrial property and construction firm Calder Stewart is progressing a pipeline of industrial construction projects around the country, from Auckland to Southland, and recently launched its master-planned 200ha industrial Milburn Quadrant north of Milton in Otago. The heavy industrial-zoned precinct will deliver the country’s largest inland port, along with supporting industrial warehousing and facilities.

“It will provide scalable opportunities for exporters, manufacturers, and freight operators seeking reliable, long-term logistics solutions, with renewable energy generated from on-site solar and a potential off-site wind farm,” says Ben Stewart, Calder Stewart associate director of property.

Meanwhile, Calder Stewart is developing two high-profile new buildings on 15ha of industrial-zoned land it owns in Drury South and has numerous projects under construction and several recently completed on Calder Stewart-owned land in Christchurch.

Also commenting on the industrial market in Total Property is ESR Australia and New Zealand, a real estate asset owner, developer and manager focusing on innovative and efficient logistics, data centres, and energy infrastructure assets across Australasia.

ESR general manager development New Zealand, Tony Catton says it continues to see strong growth in New Zealand’s industrial property market, driven by e-commerce expansion, the need for resilient supply chains, and major infrastructure investment.

"While Auckland remains a key focus due to its strategic importance and population base, we’re also exploring opportunities in high-growth regions such as Hamilton and Tauranga, which benefit from strong connectivity to major transport corridors."

Catton says although customer demand is currently subdued, ESR expects it to strengthen as the wider economy grows. ESR recently acquired 38 Dalgety Drive in Wiri, a 9.2ha heavy industrial-zoned site which he says is advantageous for a broad range of occupiers and will be redeveloped in two stages into a state-of-the-art logistics facility built to achieve a 5 Star Green Star Design and As Built NZv1.1 rating. Stage 1 construction is expected to commence in Q4 2025 and completion targeted for 2026, subject to approvals.

Another firm active in the speculative industrial space is Auckland-headquartered Euroclass, which has been operating in New Zealand for 40-plus years. Matt Doughney of Euroclass says it continues to see strong enquiry across Auckland’s prime industrial precincts, particularly for modern, well-specified facilities in the 1,000-5,000sqm range with demand led by logistics, e-commerce, and manufacturing occupiers seeking efficiency gains from purpose-built premises with smart design to maximise footprint and volume.

“The combination of robust enquiry, historically low vacancy, and the structural shortage of high-quality industrial space gives us the confidence to continue developing speculatively and means well-located, modern, flexible, high-spec buildings are absorbed quickly and often before completion.”

Euroclass’ 4,500sqm speculative build at Basalt Business Park in Wiri, which is available for lease or purchase is attracting strong interest ahead of its completion in two months, as are two other builds in Progressive Way, East Tāmaki, and Inanga Street, Hobsonville.