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The space chase

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Forget intergalactic odysseys – what industrial occupiers in this country want is quality, well-located, fit-for-purpose space and they want it now.

It’s becoming increasingly hard to find, which is prompting industrial businesses to explore their own new frontiers.

That’s particularly the case for property with some scale, as businesses ramp up production, seek greater efficiencies, look to keep on top of inventory and, in the distribution and logistics arena, battle for that last-mile position.

Vacancy rates are still at very low levels in all of the main centres, and it’s a similar story in the regions where industrial property remains sought-after and in short supply.

Despite the uncertainties of the past 18 months or so, enquiry levels are sky high, while rental rates are holding stable but still rising in some key precincts in response to supply-demand dynamics.

Developers are playing a game of catch-up after COVID-induced construction delays and, as strategically-located land becomes available, are constructing purpose-built premises for forward-thinking businesses, or committing to speculative projects sure in the knowledge that if they build it, occupiers will come.

Pre-lease activity is gaining momentum with occupiers pre-committing to new-build workspace well in advance of move-in date. Lead in times of 18-24 months are not uncommon as businesses realign their operational needs to sync’ with development timeframes and pipelines.

Getting hands on land is another fast-paced race – especially in high-growth areas like West and South Auckland, Waikato, Bay of Plenty and the constrained Wellington region.

Councils are also having to relook at zoning plans to address the shortage of industrial-zoned land to cater to the heated demand and projected growth in the sector.

Further, with budgetary cuts, much-needed infrastructural work on main arterials is, in some cases, holding progress back in the development sector.

Cold storage, manufacturing premises and data centres are high on the industrial property wish list as businesses flex to meet the challenges and expectations of a changed world.

Meanwhile, e-commerce continues to dictate the pressures on warehousing and logistics space as Kiwis intensify their online shopping habits.

In this edition of Industrial Workplace, we take a closer look at three regional markets – Bay of Plenty, Taranaki and Nelson-Tasman – and drill down into the drivers and challenges for industrial occupiers.

We also provide some research data around the industrial sector in the key markets of Auckland, Wellington and Christchurch and consider what impact this is currently having on occupiers seeking space.

Bayleys’ industrial leasing team is focused, market-savvy and well-connected to major players in the industrial property arena.

Our leasing agents are also sales’ agents in the industrial market and can assist owner-occupiers to divest property while the market is so strong, and then help negotiate leaseback arrangements that are viable for all parties.

Developing a strong relationship with a Bayleys’ broker can go a long way in your chase for industrial space and we look forward to facilitating a new direction for your business.

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