Wellington industrial vacancies drop again

Ngauranga Gorge, one of the smaller industrial precincts, has been volatile.

Vacancy across the Wellington region's primary industrial precincts fell by nearly a full percentage point over the last 12 months for the second year running, says Bayleys Research.

Overall vacancy in the agency's latest survey sat at 6.4 per cent compared with a 2013 total of 7.4 per cent, says Ian Little Bayleys senior research analyst,

"This marks the second year in a row that the vacancy rate has fallen following six years of increases from 2006," Little says. "Vacancy now sits at its lowest level since 2010 when the overall figure was 6.15 per cent."

Little says an improving economic backdrop leading to business expansion has driven down industrial property vacancy rates across the Wellington region. And the lower vacancy, particularly in modern, higher grade premises, has seen rentals begin to rise for the first time in a number of years.

"The fall in vacancy has resulted in upward pressure on rental rates becoming evident for the first time since the Global Financial Crisis [GFC]. Landlords have also benefited from reductions in insurance premiums, with falls of approximately 30 per cent being reported for some buildings," Little says.

Wellington's economic performance has been relatively flat in recent years compared with New Zealand as a whole which has largely been influenced by the performance of Auckland and Christchurch. However, an improved economic backdrop across the region was now clearly reflected by the industrial vacancy survey results.

"Employment numbers within the region have recovered to close to their pre-GFC peak. Annual Gross Domestic Product growth in the region averaged 1.8 per cent over the 2009-2014 period and this is forecast to accelerate to an average of 3.1 per cent per annum over the next five years," says Little.