Welcome to our Industrial Market Update for Quarter Two 2022.

While the Industrial sector continues to remain the preferred property sector in which to be positioned with continued tenant demand and low vacancies, many investors are watching from the sidelines.

Generally properties are taking longer to sell and under vendor expectations while some other properties are remaining unsold as Vendors and Buyers can’t agree on pricing. We expect some interesting discussions between highly geared vendors and bank managers over the next 3 to 12 months as lending and banking covenants are reviewed. It may be in some cases that the bank closes this gap for us.

Some astute vendors can see the writing on the wall and are biting the bullet early rather than waiting to see what unfolds. This brings opportunity because as we all know property is a great long term investment and if you are wanting to position yourself for the next cycle then the opportunity is coming.

It is very sector dependent, but some of our larger tenants are busier than ever yet their decision making on property requirements is slow as they try and predict the road ahead. We are also starting to see some of our smaller tenants business activity slow down. With a tight employment market and an exodus of younger staff leaving for overseas opportunities, some companies aren’t rehiring for these roles as they position themselves for the next 12 months.

With all the supply chain issues we have had over the last 2 years, many tenants have now overstocked and there is considerable demand for (full) container storage which is keeping both warehouses, the inland ports and developers yards full. We are even seeing a number of tenants unable to find buildings to lease so choosing to move into yards on a temporary basis. As inflation takes hold and mortgage rate increases start to hit households across the country, consumer purchasing power is decreasing and in time so will retail spending. At some point there must be an oversupply of goods which may see more discounted sales at a retail level and possibly more vacancy as business’s unload excess stock. The thought of more vacancy in the Auckland market seems ridiculous but we have had a great run.