Property Talk: Why is it getting hard for businesses to find premises?

Guest David Arlidge, Chris Hutching and Sally Lindsay break down the latest property news. With special audio feature.

The tight industrial property market of the past three years is making it hard to find premises for businesses.

Dave Arlidge of Knight Frank in Auckland told Property Talk vacancies in the industrial market are approaching record lows and yields have firmed.

This means some firms are turning to third-party logistics companies to store and distribute their products, he says.

Much of the Auckland industrial sector is tied up by the large NZX-listed companies like Goodman that obtain lease pre-commitments before going ahead with new construction.

The property trusts and high net worth individuals have played the greatest role in funding new projects – accounting for 65% of development with owner-occupiers responsible for the balance.

But rents have yet to reach a level to justify new speculative building, which Mr Aldridge says came a virtual halt after 2008.

Mr Aldridge believes some of the pressure in the market may ease in the coming 12 to 18 months due to an expected economic slowdown.

Meanwhile, yields have firmed to 5.8% to 6% for better buildings.

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