Market Indicators Report 2017 NEW ZEALAND INDUSTRIAL. A Well Oiled Machine. Accelerating success.

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1 Market Indicators Report 2017 NEW ZEALAND INDUSTRIAL A Well Oiled Machine Accelerating success.

2 3 Stonehill Drive Wiri, Auckland Neville Holdings purchased 3 Stonehill Drive from Rock Solid Holdings Limited for $7,025,000. The sale of the 2,300 sqm high stud prime warehouse reflected a yield of 4.9%.

3 Contents Industrial Snapshot 4 Introduction 6 Key Findings 6 Industrial Market Indicators 7 Auckland 8 Wellington 10 Christchurch 12 Regional Updates 14 Outlook 15 colliers.co.nz/find-research Join our LinkedIn group: Colliers International New Zealand Network Follow us on Subscribe on YouTube: ColliersIntNZ

4 INDUSTRIAL SNAPSHOT AUCKLAND OVERALL 2.1% Vacancy Rate HAMILTON OVERALL TAURANGA/ MT MAUNGANUI OVERALL $109/m² $208/m² 6.4% 761 ha $472/m² Average Warehouse Net Rent Average Office Net Rent Average Yield Industrial Zoned Vacant Land Average Land Value $81/m² $136/m² 6.8% Average Warehouse Net Rent Average Office Net Rent Average Yield $94/m² $134/m² 6.3% Average Warehouse Net Rent Average Office Net Rent Average Yield Outlook: Demand: Supply: Outlook: Demand: Supply: Outlook: Demand: Supply: KAPITI EXPRESSWAY, WELLINGTON MacKays to Peka Peka stage completed Q Opens up the Kapiti Coast to new industrial developments. I PORT, ROLLESTON, CHRISTCHURCH Released further freehold sections for sale in Q INFRASTRUCTURE DEVELOPMENT DEVELOPMENT THE LANDING, AUCKLAND AIRPORT Stage 2 completed Q Focus shifted to Stage 3. DEVELOPMENT Q SIX ADDITIONAL DEVELOPMENTS, AUCKLAND Goodman Property Trust announced six new industrial developments, three at Highbrook, which will add 58,368 sqm of warehouse and office space to their portfolio. 4

5 WELLINGTON OVERALL CHRISTCHURCH OVERALL DUNEDIN OVERALL 2.9% Vacancy Rate 1.9% Vacancy Rate $106/m² $136/m² 8.3% 133 ha $398/m² Average Warehouse Gross Rent Average Office Gross Rent Average Yield Industrial Zoned Vacant Land Average Land Value $90/m² $172/m² 7.6% 836 ha $285/m² Average Warehouse Net Rent Average Office Net Rent Average Yield Industrial Zoned Vacant Land Average Land Value $73/m² $119/m² 8.6% 48 ha Average Warehouse Net Rent Average Office Net Rent Average Yield Industrial Zoned Vacant Land Outlook: Demand: Supply: Outlook: Demand: Supply: Outlook: Demand: Supply: SOUTHERN MOTORWAY STAGE 2, CHRISTCHURCH Expected to open New motorway section improving travel time and congestion between central Christchurch and Rolleston. TRANSMISSION GULLY MOTORWAY, WELLINGTON Expected to open Additional route between Wellington and the lower North Island. INFRASTRUCTURE INFRASTRUCTURE DEVELOPMENT TE RAPA GATEWAY, HAMILTON Due for completion A five stage industrial park developed by Chalmers Properties. DEVELOPMENT TITANIUM PARK, HAMILTON Due for completion A mixed use industrial and commercial development consists of five stages spanning a total 75 hectares of land. 5

6 Introduction Industrial Prime Yields - Three Main Centres The New Zealand industrial market has powered on over the past 12 months, with continued upward momentum in all centres. Investor confidence remains strongly positive. Investment activity has been driven by robust occupier and buyer demand, with a shortage of good quality opportunities driving up prices. It comes as no surprise that record low yields, high rental growth, and strong capital appreciation have been the main outcomes. Prime Industrial Yield 9% 8% 7% 6% 5% 4% 3% 2% 10 Year Average Increasing land values and construction costs will moderate the amount of new industrial development over the short to medium term in some centres. All major economic indicators signal an expansionary outlook for the New Zealand economy and the industrial sector. 1% 0% Jun-16 Jun-17 Auckland Source: Colliers International Research Jun-16 Jun-17 Wellington Jun-16 Jun-17 Christchurch Key Findings»» Auckland s overall industrial vacancy is currently 2.1% (February 2017), down from the previous record low 2.2% recorded in February Demand from both tenants and owner occupiers has been consistently strong over the past year as businesses continue to expand off the back of a strong economy.»» Tenant and owner-occupier demand in Wellington has grown even stronger over the past year. Overall combined prime gross rents increased by 7.4% in the year to June 2017 reaching $127/ sqm, with secondary increasing by 9.5% to $98/sqm.»» The Christchurch investment market has substantial capital ready for investment. Prime yields in the 6.0% to 6.5% range are being seen more regularly with average prime yields currently sitting at 6.8%, down from 7.0% 12 months ago.»» Prime vacant space is being absorbed almost as soon as it becomes available in Hamilton. However more supply is expected as Chalmers Properties develop several speculatively built premises at Te Rapa Gateway. Industrial Vacant Land Supply - Three Main Centres Vacant Industrial Land (ha) Nov-15 Nov Auckland Wellington Christchurch Source: Corelogic, Colliers International Research»» The Tauranga industrial market is currently experiencing record low vacancy and justifiably so, considering the high population growth the city has experienced over the past few years. Industrial Investor Confidence Survey - Three Main Centres»» Demand continues to outweigh supply in the Dunedin industrial market with little prime stock currently available for either lease or purchase. Net Percent 80% 60% 40% 20% 0% -20% -40% Jun-12 Dec-12 Auckland Wellington Christchurch Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Source: Colliers International Research 6

7 New Zealand Industrial Market Indicators Q Precinct Vacancy Rate (%) Average Net Prime Rentals ($/m² pa)*** Average Net Secondary Rentals ($/m² pa)*** Office Warehouse Office Warehouse Prime Capital Values ($/m²)* Secondary Capital Values ($/m²)* Prime Market Yields (%)** Secondary Market Yields (%)** OVERALL LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH AUCKLAND Feb - 17 Airport Corridor 3.3% ,175 3,040 1,175 1, % 6.25% 6.75% 8.00% East Tamaki 2.4% ,145 3,160 1,275 1, % 6.25% 6.50% 8.00% Manukau/Wiri 2.2% ,145 2,970 1,265 1, % 6.25% 6.50% 8.00% Mt Wellington 1.9% ,145 3,160 1,275 1, % 6.25% 6.50% 8.00% Penrose / Onehunga Rosebank / Avondale 1.8% ,145 3,160 1,275 1, % 6.25% 6.50% 8.00% 1.6% ,045 3,010 1,200 1, % 6.50% 6.50% 8.00% New Lynn 3.1% ,800 2,515 1,200 1, % 7.00% 7.00% 8.00% Henderson 1.0% ,800 2,515 1,200 1, % 7.00% 7.00% 8.00% Mairangi Bay 2.2% ,200 3,140 2,000 2, % 6.00% 5.50% 6.50% North Harbour 1.1% ,135 3,080 1,910 2, % 6.00% 5.50% 6.50% Wairau Valley 1.5% ,115 3,220 1,685 2, % 6.00% 5.50% 7.00% WELLINGTON Nov - 16 Seaview 2.7% ,590 2, , % 8.00% 8.25% 9.50% Grenada 0.2% ,515 2,045 1,005 1, % 8.00% 8.25% 9.25% Miramar / Rongotai 0.0% ,305 1, , % 8.50% 9.00% 9.50% Ngauranga 3.3% ,755 2,340 1,220 1, % 7.75% 8.00% 9.00% Petone / Alicetown 4.6% ,625 2,180 1,200 1, % 7.75% 8.00% 9.25% Porirua 3.4% ,500 1, , % 8.00% 8.00% 9.25% Naenae /Wingate 3.9% ,305 1, % 8.50% 8.50% 9.50% Upper Hutt 1.4% ,065 1, % 9.00% 9.25% 10.00% CHRISTCHURCH Sept - 16 Hornby / Islington 0.5% ,570 2, , % 6.75% 7.50% 8.50% Middleton / Sockburn 2.3% ,570 2, , % 6.75% 7.50% 8.50% Sydenham 3.4% ,570 2, , % 6.75% 7.50% 8.50% Riccarton / Addington ,570 2, , % 6.75% 7.50% 8.50% Bromley , % 9.25% 8.50% 11.25% Woolston ,460 2, , % 7.25% 8.00% 9.00% HAMILTON Hamilton ,325 2, , % 6.50% 7.00% 8.00% TAURANGA Tauranga / Mt Maunganui ,835 2,500 1,065 1, % 6.00% 6.50% 7.50% DUNEDIN Inner City ,175 2, , % 8.00% 8.00% 10.00% Kaikorai Valley , % 8.75% 8.75% 10.50% Mosgiel , % 8.75% 8.75% 10.50% Source: Colliers International Research Assuming 2000m² building with 50% site coverage *Based on net combined rents of warehouse and office rents (assumes warehouse/office ratio of 80:20) and assuming fully leased at market rates **Assumes freehold where appropriate ***Wellington based on gross rents Note: figures are rounded 7

8 Auckland Auckland Industrial Vacancy by Precinct Feb-16 Feb-17 6% The Auckland Industrial market has gone from strength to strength over the past 12 months with our February 2017 vacancy survey showing an overall vacancy rate of 2.1%, down from the previous record low 2.2% recorded in February Demand from both tenants and owner occupiers has been consistently strong over the past year as businesses continue to expand off the back of a strong economy. We are now seeing increased demand for larger, higher quality buildings, as well as businesses seeking design-build premises. Bunnings Warehouse recently commissioned the largest design build the market has seen in recent years for a new 20,500 sqm distribution centre at Auckland Airport. Smaller premises have remained in high demand continuously over the past 12 months. Vacancy Rate 5% 4% 3% 2% 1% 0% Overall Onehunga/Penrose Rosebank/Avondale Mt Wellington Airport Corridor Manukau/Wiri Source: Colliers International Research East Tamaki Mairangi Bay North Harbour Wairau Valley New Lynn Henderson The 185,000~ sqm of development completed over the past year has played catch up to the excess demand rather than tipping the scales towards oversupply. This recent crop of developments included the new 55,000 sqm state of the art Sistema factory completed in Q There is another 120,000 sqm currently under construction. Given the current conditions, some developers or owners with industrial vacant land are going ahead with speculatively built premises, and further prime grade stock is expected to be constructed on this basis over the coming year. Of the developments announced by Goodman Property Trust (GMT) for FY18*, approximately 80% (by net lettable area) have been speculatively built, demonstrating the confidence in the extent of current demand. With developable industrial land hard to find and building costs surging ahead we re seeing significant pressure on rents, and this is expected to continue in the short to medium term. The latest Colliers International Industrial Vacant Land Survey showed approximately 82 ha was absorbed between November 2015 and November 2016, one of the fastest rates of land take-up experienced post-gfc. Average prime warehouse rents are now at $119/sqm the same level as 12 months ago, with secondary at $98/sqm, up from $91/ sqm. Incentives are still being offered, however they tend to be at low levels. With limited options available to lease, some tenants are opting to become owner occupiers where land and building packages are being offered. Auckland Industrial Development 119,066 sqm 13,700 sqm Source: Colliers International Research 116,192 sqm 65 Hugo Johnston Drive Penrose, Auckland Under Construction Proposed (to 2022) Proposed (2022+) High investment demand, strong expectations of future rental growth, and a shortage of opportunities has driven yields lower. Average prime yields for June 2017 are 5.8%, down from 6.1% 12 months ago, with secondary at 7.0%, down from 7.2% 12 months ago. The recent $7 million sale of 3 Stonehill Drive reflected a strong yield of 4.9%. Over the next 12 months, yields are expected to remain firm, with many cashed-up investors waiting for a chance to buy. *1 Apr March 2018 In May 2017, an owner-occupier purchased the former Sistema Plastics premises at 65 Hugo Johnston Drive from PFI. The premises was sold vacant for $14,250,000. Sistema moved to their new premises in late 2016, a state of the art 55,000 purpose-built facility in South Auckland. 8

9 North Harbour Mairangi Bay $ % $ % 18 NORTHERN MWY $ % $ % KEY UPPER HARBOUR MWY NORTH WESTERN MWY Wairau Valley $ % $ %* Industrial Areas Average Prime Land Values ($/m 2 ) Average Prime Market Yields (%) Average Prime Warehouse Rents ($/m 2 ) Prime Vacancy Rates (%) Rosebank/Avondale $ % Auckland CBD Trend 0%/$0 Actual Financial Indicators: Jun 16 to Jun 17 Physical Indicators: Feb 16 to Feb 17 $ % 16 Henderson $ % $ % Rosebank Road Interchange Penrose/Onehunga $ % SOUTH WESTERN MWY $ % Mt Wellington $ % $ % New Lynn $ % $ %* East Tamaki $ % $ % Highbrook Drive Interchange Airport Corridor/ Mangere $ % 20 Manukau/Wiri $ % * Overall vacancy $ % $ % Auckland Industrial Market Review 2017 compared to 2016 Occupier Demand Enquiry Investor confidence Supply Demand Vacancy Prime grade 1.4% (Feb 2017) Secondary grade 2.3% (Feb 2017) Spec build activity Rentals Average prime grade Warehouse $119/m 2 Office $240/m 2 Prime Incentives 2 weeks/year of term Investment Sales Average prime yields 5.8% Average secondary yields 7.0% Investor Demand Enquiry demand, prices Buyer groups = private, institutions Land Supply Enquiry Available land for sale Value pressure 9

10 Wellington Gracefield Road Seaview, Wellington Tenant and owner-occupier demand in Wellington has grown even stronger over the past year with our latest vacancy survey showing a record low of 2.9% in November 2016, a theme that has continued into This was a further reduction from the previous record low of 3.6% in November 2015, proving the need for new development. Prime vacancy reduced to 0.6%, from 4.0% (the lowest in five years) and secondary to 3.1%, down from 3.6%. Other factors driving vacancy down include the conversion of industrial premises to other uses, and demolition/acquisition for infrastructure projects. Expanding businesses are another driver of demand in this market with some moving into two or three different sites if they can t find one property large enough. Further development is being hindered by a lack of available vacant industrial land in the more centrally located precincts, along with rising construction costs. This is putting further pressure on the current supply demand dynamic and driving rents upwards. Prime combined gross rents increased by 7.4% in the year to June 2017 reaching $127/sqm, with secondary increasing by 9.5% to $98/sqm. Gek Property Nominees (Seaview) Limited sold Gracefield Road for $14,000,000 in November 2016, at a yield of 8.0%. The large transport/ distribution depot comprises a medium stud warehouse and canopy together with an adjoining large high stud purpose built modern warehouse which includes a large drive through canopy. Wellington Industrial Vacancy by Precinct The volume of sales over the past 12 months has been lower, recording firmer yields for properties that do come up for sale. Prime yields reduced to 7.7% as at June 2017, down from 7.9% 12 months ago, with secondary yields at 8.9%, down from 9.2%. Positive market conditions are expected to continue for the next few years being underpinned by current and proposed infrastructure projects intensifying demand from businesses involved directly and indirectly in the projects. The Hutt River stop bank works, aimed at protecting Lower Hutt from flooding, will see around 15 industrial properties housing around 35 businesses demolished by the Regional Council. The new Petone to Grenada Link Road, proposed to start in 2019, will also reduce industrial supply by around 35 properties involving some 45 businesses, prompting tenants and owner occupiers to re-position themselves in anticipation of the upcoming changes. A total of almost 50,000 sqm of industrial space and over 7.5 hectares of land will be removed from the market by these two projects. Recent conversion projects to retail involving Countdown, Bunnings, Briscoes/Rebel Sport and Kmart has removed a further 27,000 sqm of industrial buildings and around six hectares of industrial land from the sought after Petone market. Vacancy Rate 5% 4% 3% 2% 1% 0% Overall Source: Colliers International Research *0% vacancy Seaview Petone/Alicetown Nov-15 Grenada North 33 Bouverie Street Petone, Wellington Naenae/Wingate Nov-16 Ngauranga Porirua Upper Hutt Kilbirnie/Rongotai * Miramar The Transmission Gully motorway, expected to open in 2020, will service the need for an additional and more reliable route between Wellington and the lower North Island, strengthening accessibility to Wellington as an industrial hub. It will also improve connectivity around the region. The recently completed MacKays to Peka Peka stage of the Kapiti Expressway will open up the Kapiti Coast to new industrial development, eventually stretching to Levin. 33 Bouverie Street was leased to Foodstuffs North Island for their new Gilmours Wholesale & Beverage premises. The site comprises a large warehouse built in 2004 with a 9m stud height and is to be refurbished by the tenant. 10

11 KEY Industrial Areas Average Overall Land Values ($/m 2 ) Average Overall Market Yields (%) Average Overall Warehouse Rents* ($/m 2 ) Porirua $ % $ % Upper Hutt INDICATIVE TRANSMISSION GULLY MOTORWAY $ % $83 1.4% Overall Vacancy Rates (%) Trend 0%/$0 Actual Financial Indicators: Jun 16 to Jun 17 Physical Indicators: Nov 15 to Nov 16 Ngauranga $ % $ % JOHNSONVILLE PORIRUA MWY 1 2 Grenada North $ % $ % 2 Petone/Alicetown $ % Wingate/Naenae $ % $93 3.9% $ % Wellington CBD Kilbirnie/Rongotai/Miramar $ % $ % Seaview/Gracefield $ % $ % Wellington Industrial Market Review 2017 compared to 2016 Occupier Demand Enquiry Investor confidence Supply Demand Rentals Average overall*: Warehouse $108/m 2 Office $130/m 2 Investor Demand Enquiry demand, prices Buyer groups = private, institutions Vacancy Overall vacancy 2.9% (Nov 2016) New build activity Investment Sales Average prime yields 7.7% Average secondary yields 8.9% Land Supply Enquiry Available land for sale Value pressure *Based on gross face rents 11

12 Christchurch 466 Blenheim Road Sockburn, Christchurch The prime industrial market in Christchurch has remained tight over the past 12 months. Demand has been concentrated on efficient high stud premises. The competitive construction industry in Christchurch is keeping building costs in check. Most development at the moment is for owner occupiers. Asking rents offered for newly built prime stock have been competitive. This has enabled some tenants to expand into newly built premises at not much more than an existing site. New build rents are expected to stay at current levels over the short to medium term. In the secondary market increasing vacancy is putting downward pressure on rents, in particular for low stud height buildings, with some landlords reducing their asking rent to fill vacant space. Prime average net warehouse rents remained at $103/sqm in June 2017, the same level as 12 months ago, with secondary increasing to $77/sqm, up from $76/sqm 12 months ago. Incentives effectively disappeared following the major earthquakes in Christchurch, however for existing buildings they are now starting to be discussed more regularly in negotiation. The Christchurch investment market has substantial capital looking for opportunities. The recent sale of the Kathmandu Distribution Centre in Christchurch involved a national campaign which generated substantial interest from the North Island, particularly Auckland, showing the level of demand across the country for good quality prime assets. Secondary yields are starting to soften. Prime yields in the 6.0% to 6.5% range are being seen more regularly with average prime yields sitting at 6.8% in June 2017, down from 7.0% 12 months ago, and secondary at 8.4%, down from 8.6% 12 months ago. Over the next 12 months, the current level of development is expected to ease. Although fundamentals are encouraging, some constraints on debt availability and uncertainty around rental growth may make developers pause before taking the plunge. Vacancy Rate 466 Blenheim Road was sold with vacant possession following an international marketing campaign where a high number of offers were received with most coming from outside of Christchurch including the successful purchaser. Christchurch Industrial Vacancy Survey by Precinct 4% 3% 2% 1% 0% Overall Hornby/Islington Source: Colliers International Research Sep-15 Sep-16 Middleton/Sockburn Sydenham Kathmandu Distribution Centre 33 Kennaway Road, Woolston The Kathmandu Distribution Centre at 33 Kennaway Road was sold for $15,900,000, reflecting a yield of 6.8%. 12

13 CHRISTCHURCH INTERNATIONAL AIRPORT Riccarton $ % $108 Bromley $ % $85 Hornby/Islington $ % $105 0% Sydenham $ % $108 0% 73 KEY Industrial Areas Average Prime Land Values ($/m 2 ) Average Prime Market Yields (%) Average Prime Warehouse Rents ($/m 2 ) Prime Vacancy Rates (%) Sockburn/Middleton $ % $ % 75 Portlink Industrial Park Woolston/Hillsborough $ % $105 Trend 0%/$0 Actual Financial Indicators: Jun 16 to Jun 17 Physical Indicators: Sept 15 to Sept 16 Christchurch Industrial Market Review 2017 compared to 2016 Occupier Demand Enquiry Business confidence Supply Demand Vacancy Prime grade 0.3% (Sep 2016) Secondary grade 2.0% (Sep 2016) Spec build activity Rentals Average prime prade: Warehouse $103/m 2 Office $201/m 2 Investment Sales Average prime yields 6.8% Average secondary yields 8.4% Investor Demand Enquiry demand, prices Buyer groups = private, institutions Land Supply Enquiry = Available land for sale = Value pressure = 13

14 Regional Centres Tauranga The Tauranga industrial market is currently experiencing record low vacancy and justifiably so, considering the high population growth the city has experienced over the past few years. This has created strong business confidence, with the buoyancy of the property market allowing investors to positively gear properties. Whango Place Tauriko Business Estate, Tauranga Tauriko Business Estate is set to commence construction on several industrial sites including some speculative developments. This will provide more options for businesses who may be struggling to expand in the current tight conditions. The lack of available stock is expected to cause upward rental growth on new builds and prime grade premises over the next 12 months. As tenants and owner occupiers move into new premises, secondary grade rents are expected to soften slightly. After experiencing record low yields in the second half of 2016, yields have begun to soften by 25 to 50 basis points over the past 12 months. However, investor demand remains strong, in particular for prime properties, and yields are expected to remain steady over the next 12 months. NZL Group have leased a high tech purpose-built facility comprising a 17,000 sqm warehouse and new head office. The state of the art warehouse is to be developed within the Tauriko Business Estate and expected to be completed mid Hamilton Hamilton s industrial market continued to achieve steady growth over the past year, resulting in available prime vacant space being absorbed almost as soon as it became available. However more supply is expected as Chalmers Properties develop several speculatively built premises at Te Rapa Gateway, showing the current growth in the market. Strong tenant demand for prime existing stock is putting upward pressure on prime net combined rents which reached $130/sqm for June 2017, over 6% higher than 12 months ago. A potential challenge for developers is tenants' unwillingness to pay the premium for new builds if they can find a comparable existing premises at a lower cost. Average prime yields have firmed by over 100 basis points in the past 12 months. Investors with good quality assets have rarely sold, but when they have, strong prices have been achieved. A steady flow of investor enquiry, including from Auckland, has placed further pressure on available stock to purchase. Non-location sensitive businesses from Auckland have also looked to relocate to a more affordable market. Yields are likely to soften over the next 12 months, however there is no evidence in the market yet, as transactions are continuing to reflect firm yields Simsey Place Te Rapa Park, Hamilton In March 2017, Wrightsons leased 4,420 sqm from Erinic Investments Ltd at 7-11 Simsey Place. The building was leased immediately after Fonterra (the former tenant) vacated. Dunedin Demand continues to outweigh supply in the Dunedin industrial market with a lack of prime stock currently available for either lease or purchase. Tenants interested in relocating are overlooking available secondary space and instead opting for design-builds or staying put until the right option becomes available. Port Otago subsidiary Chalmers Properties completed a design build for Steel & Tube in early 2017 allowing the consolidation of two existing sites into one purpose built facility. New builds have upped the ante for industrial prime rents in Dunedin, with existing stock expected to play catch up over the next 12 months. With a high portion of core existing stock being leasehold, any freehold investments that come up for sale are highly sought after. Business confidence has been on the rise, but restricted borrowing ability may cause yields to soften over the next 12 months. 197 Fryatt Street Dunedin Steel & Tube Holdings Limited have leased a 4,600 sqm design-build warehouse from Chalmers Properties in the Harbour Basin industrial area. This development enabled Steel & Tube to consolidate two former sites into one new facility. 14

15 Outlook Over the next 12 months we expect to see a continuation of similar conditions in the industrial market. A shortage of prime stock will continue to cause upward pressure on rents, some of which will flow into the take-up of secondary space and continue to fuel the demand for newly built stock. Speculative builds which have been completed this past year have been successfully leased. The rental growth cycle may be nearing its peak in some markets. However, increasing land values and construction costs will moderate the amount of new industrial development over the short to medium term. Until more supply arrives, vacancy is expected to remain at low levels. Major infrastructure projects currently underway will create new efficiencies through improved journey times and connectivity, and potentially a change to the relative merits of various precincts. Despite positive investment conditions over the past 12 months, sales levels have eased from that in This however, isn t a reflection of weakening demand from tenants, but of the limited amount of properties available for sale. Yields aren t expected to go much further south over the next 12 months, and as access to lending becomes harder, investors will become more selective about their next move. 15

16 For more information contact: Alan McMahon National Director Research & Consulting Leo Lee Research Manager Elena Christodoulou Research Analyst Emily Duncan Research Analyst Josh Lee Research Co-ordinator 2015 & 2016 RICS Award Chris Farhi Director Strategic Consulting Caity Pask Senior Analyst Strategic Consulting Colliers International Level 27, SAP Tower 151 Queen St, Auckland Colliers International Research and Consulting offers a range of commercial and residential property solutions: Property Investment Strategies Demand & Supply Studies Market Analysis & Forecasts Feasibility Analysis GIS Spatial Analysis Catchment Analysis Lease Audit & Benchmarking Site Options Analysis Corporate Real Estate Strategy Financial Analysis Business Cases Whilst all care has been taken to provide reasonably accurate information within this report, Colliers International cannot guarantee the validity of all data and information utilised in preparing this research. Accordingly Colliers International New Zealand limited, do not make any representation of warranty, expressed or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto. All content is Copyright Colliers International New Zealand Limited 2017 and may not be reproduced without expressed permission. 16 Licensed REAA 2008