Leasing remains tight but opportunity knocks: survey

Chris Dibble, research and communication director at Colliers International. Photo / Supplied

Colliers International's latest Auckland industrial vacancy survey shows leasing conditions remain tight, but there is a glimpse of opportunity for some tenants searching for new premises to occupy that could assist with their 2020 planning.

Chris Dibble, Research and Communications Director at Colliers, says the overall Auckland industrial vacancy rate remains at a low of 2.1 per cent, below the decade average of 3.3 per cent, but up slightly in the past year.

"When we look into the overall results further, some options have become available within the secondary sector, with the vacancy rate increasing to 2.3 per cent from 1.5 per cent at the beginning of the year.

"There are also situations where some of the secondary premises that have become vacant show signs of 'stickiness', not leasing up within normal expected timeframes. We will wait to see if this becomes an ongoing trend."

However, in the higher-quality end of the market, it remains tight.

"Solid levels of leasing and expansion activity combined with a considered supply response has pushed prime vacancy to a low 1.5 per cent, down from 2 per cent a year ago," says Dibble.

"Tenants looking for higher quality space will need to time their move and consider their options well in advance. It may also be prudent to consider relocation as an alternative means to securing space."

Location continues to play a significant role when it comes to tenant opportunities. With less than 1 per cent vacancy in the Airport Corridor, finding any quality of existing space is challenging, however, design-build could be an option for some.

East Tamaki, which comprises 20 per cent of total Auckland industrial space, has a vacancy rate of 1.5 per cent.

"Spec-building has risen, but demand has seen strong pre-leasing activity," says Dibble.

The more traditional industrial precinct of Onehunga and Penrose, which accounts for 18 per cent of total supply, has a vacancy rate of 2.6 per cent. This is still low but up slightly, representing almost 60,000sq m of available space – one of the largest on offer in any one precinct.

For those looking for higher quality space, Manukau/Wiri is where the most prime vacant space is available at the moment.

In the office market, Colliers International's latest Auckland metropolitan office survey shows an overall vacancy rate of 5.8 per cent – the lowest in a decade.

"This shows current leasing conditions in the office sector remains tight, but some larger office vacancies becoming available over the next two years may assist some tenants."

The survey shows that of the 1.7 million square metres of office space outside the CBD, there is now less than 100,000sq m of space available for tenants to consider.

The prime vacancy rate is at a record low 3.3 per cent while the secondary vacancy rate is at a more manageable 6.3 per cent, which is still quite low for the past decade.

"What we do know is that there are a number of larger occupiers on the move that could help ease the imbalance," says Dibble.

The recently announced move of Genesis to Mansons TCLM's 136 Fanshawe Street development in Wynyard Quarter is one example.

"Some landlords may consider breaking up the space vacated into smaller tenancies to assist with leasing activity, which is where a significant amount of tenant demand lies for existing non-CBD space."