APRIL- MAY 2022
Commercial property bounces back from restrictions Demand for real estate is expected to pick up across all asset classes, although recovery will remain multispeed, says JLL New Zealand Head of Research Gavin Read
M
arket activity for sub-sectors will continue to be driven on an opportunity-by-opportunity assessment basis. As borders are planned to open further in 2022, cross-border investments into New Zealand should recover with increased travel and accessibility thus supporting transaction activity. We highlight some key property thoughts for 2022 that will impact on property decision making as follows:
• Environmental, social and governance considerations will continue to be at the forefront of conversations and increasingly underpin prime real estate decisions for all key stakeholders. • With increasing interest
rates and murmurings that funding is getting tighter, there will be continued focus on the quality of occupiers to secure predictable and sustainable future returns for investors.
• Investment decisions will continue to focus on the longer-term horizons and see through the 78 propertyandbuild.com
shorter-term impacts of the pandemic on the economy.
• Quality offerings of all asset classes will attract tenants, as the ‘flight to quality trend’ continues to be increasingly important, along with a widening divergence between prime and secondary assets.
Auckland Industrial Demand Supported by robust demand from both manufacturing and logistic occupiers, Auckland industrial market remains tightly held as demand continues to outpace supply. With tenants competing strongly for space in 2H21, vacancy fell: from 2.3 to 0.9 percent in Auckland City from 2.1 to 1.0 percent on the North Shore from 1.5 to 0.8 percent in Auckland South. Although we don’t track vacancy rates for the North West precinct, overall vacancy fell for Auckland industrial fell from 1.9% to 0.9%. Demand is particularly
strong for well-located and modern facilities as occupiers consider long-term efficiency and sustainability strategies. Any weakness in demand is much more likely to be experienced in the secondary market as tenants move into new or better stock. With that being said, secondary assets with under-utilised land are likely to be targeted by add-value investors or developers for redevelopment or refurbishment opportunities, especially those in good locations. Supply There were two completions reported during 4Q21, both in the Auckland South precinct.
The first was the completion of one of the lots at 78 Tidal Road in Mangere, a warehouse by Centura. The other was a warehouse for Wurth NZ at McLaughlins Road in Wiri. There remains a number of developments in the pipeline supported by strong demand. In Auckland City, these are spread across Mt Wellington, Otahuhu, St Johns, Sandringham, Mt Albert, Mt Roskill, Onehunga and Ellerslie. Developments on the North Shore are concentrated in Silverdale, but are also spread across Takapuna, Northcote, Albany and Rosedale. Auckland South industrial developments are spread
