Ware­house space in short sup­ply

Matamata Chronicle - - Your Paper, Your Place - PROP­ERTY

A coun­try-wide lack of in­dus­trial prop­erty has left the boom­ing ware­hous­ing sec­tor with sim­ply not enough space.

Strong eco­nomic growth and the high cost of build­ing new ware­houses have seen in­dus­trial vacancy rates plunge to record lows.

Aaron Young, man­ag­ing di­rec­tor of Store­pro, one of the coun­try’s largest pal­let rack­ing sup­pli­ers, is very con­nected to the ware­hous­ing sec­tor and says it is the tight­est mar­ket he had seen in his 19 years in the in­dus­try.

‘‘Ba­si­cally there’s noth­ing to buy, there’s very few to lease, the mar­ket’s very tight in terms of [be­ing] owned by pre­dom­i­nantly big land­lords.’’

He es­ti­mated that in the last three years, Auck­land ware­house land val­ues had gone up by 30 per cent, with rent on its coat-tails. .

The high price of ware­house prop­er­ties was be­ing made worse by baby boomers look­ing for higher re­turns, who had turned to in­dus­trial prop­erty.

‘‘They’re pretty happy to ac­cept a pretty lean yield in the 5 per cent range, which has now be­come the norm.’’

Build­ing new was also pro­hib­i­tive, with Good­man Trust’s chief ex­ec­u­tive John Dakin es­ti­mat­ing re­cently that the av­er­age cost of build­ing a ware­house in Auck­land had risen about 50 per cent com­pared to five years ago.

The ware­hous­ing short­age is na­tion-wide but par­tic­u­larly acute in Auck­land, boosted by the growth of large-scale lo­gis­tics and freight for­ward­ing busi­nesses.

Col­liers na­tional re­search di­rec­tor Alan McMa­hon said de­mand had re­ally ramped up over the last three or four years and even new spec­u­la­tive build­ings were not keep­ing up with de­mand. ‘‘In Auck­land there’s about 12 mil­lion square me­tres of in­dus­trial prop­erty, and that’s ware­hous­ing and man­u­fac­tur­ing ba­si­cally, and at the mo­ment the vacancy rate is 2.4 per cent, which is the low­est it’s ever been.’’

Prime in­dus­trial space had slid to a low of 1.7 per cent, with sec­ondary at 2.7 per cent. And it was a sim­i­lar in Welling­ton and Christchurch. For ware­house own­ers, the short­age bodes well for rental in­come. McMa­hon said spec­u­la­tive builders were do­ing well, but the lag in sup­ply would in­evitably push up rents.

-Cather­ine Har­ris

RALPH D. FRESO/REUTERS

Enor­mous ware­houses like Ama­zon’s are com­ing closer to home as the on­line re­tailer opens in Aus­tralia.

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