As New Zealand businesses bounce back post-recession, commercial real estate agency Knight Frank warns the Auckland property sector will struggle to meet demand for industrial premises to lease.

The firm’s Josh Franklin says the property market will face increasing pressure as the revival of Auckland based businesses and new offshore entrants creates more demand particularly for bigger or multiple premises.
“The industrial property sector in Auckland has been extremely busy over the past 12 months as companies begin to recover from the global financial crisis. However, as the demand for premises increases, the supply of new properties for lease remains worryingly static, outside the design - build sector,” he says.
The biggest concern, says Franklin, is the lack of central isthmus land suitable for industrial development and the value of improvements particularly on central ‘brownfield’ sites that is still too high to allow redevelopment. Higher land values may potentially be problematic for industrial tenants and could lead to an increase in occupation costs.