Australia’s biggest superannuation fund invests in Auckland’s space-starved industrial property market as industrial vacancy drops to a record low of 1.5%.
The overall industrial vacancy rate in Auckland fell to a record low of 1.5% in February, and the squeeze on industrial space is pushing up rents according to Colliers.
With this comes news that Australia’s biggest superannuation fund AustralianSuper has partnered with Australian property developer Logos for the development of 120,000m2 at Wiri Logistics Estate, South Auckland.
Logos bought a 10 hectare Wiri site in 2018 to establish the Wiri Logistics Estate and started work on the first tenancy, a 15,700m2 meat processing plant for international food group Hilton Foods, in April 2019. Hilton has committed to a 25 year pre-lease.
The estate has since expanded to 24 hectares after Logos and AustralianSuper bought another 14 hectares from Fletcher Concrete and Infrastructure.
The combined 24 hectares will be transformed into a NZ$500 million prime logistics estate, offering 120,000m2 of industrial space.
AustralianSuper head of property, Bevan Towning, said the partnership would grow the fund’s investment footprint in New Zealand and deliver strong, long-term returns for its members.
“AustralianSuper’s investment highlights the increasing strength of the New Zealand industrial and logistics sector, which has seen renewed growth over the past few years on the back of the country’s underlying economic fundamentals, increasing population and, importantly, the rise in e-commerce.” – Darren Searle, Logos’ head of Australia and New Zealand.
Industrial property is one of the top performing categories of commercial property in New Zealand, particularly in Auckland. Wiri has an industrial vacancy rate of only 1.4% according to Colliers International (1H2019 Market Snapshot).
Colliers market snapshot said conditions remain tight in prime areas like Wiri, Airport Corridor, Rosebank and North Harbour.
High levels of tenant demand pushed the overall vacancy rate to a record low 1.5% in Colliers February survey. Secondary vacancy rates are also at all-time lows.
Although 312,000m2 of space is under construction or proposed, this represents a mere 2.6% of current supply and will do little to alleviate the shortfall in supply.
The limited space and the slower firming in investment yields is leading to higher levels of rental growth. Auckland experienced industrial rental growth of 5% over the past year. Colliers forecast rents to increase by around 3% over the next year and say some premises could see rental growth of 4% to 5% pa.
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