See below a summary of the biggest trends within New Zealand’s industrial market, plus an outlook on the next 12 months for the market.

Biggest trends

Activity from occupiers picks up

After a period of slower leasing, tenant enquiry levels are improving, particularly from businesses in need of premises with stronger functionality or better locations. However, growing availability of industrial properties for lease is giving occupiers more choice and softening urgency in some areas.

Land remains short in supply

Industrial-zoned land is highly sought after across all size ranges. Sustained shortages led to substantial growth in land prices over the past decade. Developers and large-scale owner-occupiers are competing to secure suitable sites in desirable locations.

Developers positioning for the next cycle

A lift in occupier demand and the view that the market is at a cyclical low are prompting more developers to move forward with speculative new builds. These projects aim to be well-positioned as conditions strengthen.

Outlook for the next 12 months

Steady rental conditions

Rents are stable across most urban areas. Rental growth has eased from previous surges. Rising vacancy levels and moderate demand mean that growth rates will be slower. Incentives are offered in some cases, but widespread discounting of face rents remains unlikely.

Green shoots emerging in the investment market

After a period of weakness, sentiment among agents suggests that investment market conditions are improving. Yields have risen since 2022 due to higher interest rates. Although interest rates have recently fallen, yields may not reduce significantly from current levels due to ongoing concerns about inflation.

Confidence up but sales volumes still light

While lower interest rates have improved confidence, buyers still may face some friction when securing finance. Sales volumes remain relatively subdued due to ongoing gaps in price expectations between buyers and vendors, though recent large-asset transactions point to improving momentum.