Auckland City industrial
market snapshot 2Q20
Overall vacancy in the Auckland City industrial areas rose to 2.2% over 1H20 from 2.1% in 4Q19. Avondale saw the largest rise in vacancy, increasing to 4.3% from 2.5% in the previous half. Penrose also saw an increase, rising 0.3% to 2.3%. By contrast, Mount Wellington and Henderson both experienced a fall in vacancy over 1H20 and now sit at 1.3% and 1.0% respectively. Prime stock vacancy is expected to remain low as occupier demand for high quality space remains robust across the Auckland region and the trend of flight to quality continues.
Supply continues to slowly increase across the Auckland City industrial property markets with a modest number of developments currently under construction. These projects are expected to complete over the rest of 2020 and 2021, which should provide the market with some much needed breathing room in the long term. Much of the pipeline also remains in various stages of planning across the sub-precincts. We expect the rate of these projects being delivered to slow given delays during COVID lock-down and less speculative development likely.
Auckland City industrial rents remained stable over 1H20. Average prime rents currently sit at $168 psm, with average secondary rents at $136 psm. Average prime yields remained at 1Q20 levels of 4.94% while average secondary yields rose to 6.00%. This represents ranges of 4.63% to 5.25% and 5.50% to 6.50% respectively. Average incentives also rose over the quarter across Auckland. Prime incentives rose to 3.3% from 3.0% in 4Q19 while secondary incentives rose from 4.2% to 6.3%.