Industrial property is headed for "another golden run" according to the latest research report from Colliers International.
"Demand [for industrial properties] is the best it has been in decades and this is an attractive feature for a market hungry for good quality investment opportunities," the report said.
Colliers national research manager Chris Dibble, said stronger economic activity was driving demand.
"Better business conditions are flowing into the sector," he said.
"Businesses are looking to take on more work and need more space.
"This is pushing down vacancy rates to levels that have not been experienced since before the global financial crisis and in some precincts, vacancy is at a record low."
In Auckland, the overall industrial vacancy rate was at its lowest point since Colliers started keeping records in the mid-1990s.
Within the region, overall vacancy rates ranged from 2.3% in he Mairangi Bay, Henderson and Wairau Valley precincts to 3.6% in New Lynn.
Prime quality industrial properties were in particularly short supply, with their region-wide vacancy rate at 2.2%.
"There is a lack of options for tenants to choose, signalling the start of a new construction phase in the industrial sector over the short term," the report said.
"Pent up investor demand for quality industrial property is leading to record low yields being achieved on a more regular basis."
Yields on prime properties were in the 6.25% to 7.5% range while secondary properties were achieving 7% to 9%.
In Wellington vacancy rates were also declining and ranged from 2.9% in Porirua to 11.7% in Upper Hutt, with the overall rate for the region at 5.6%, the lowest recorded since Colliers started surveying vacancy rates in the region in 2009.
"Higher leasing activity and reducing vacancies are fuelling moderate rental increases, the report said.
"Tenants should prepare for rental increases between 1.5% and 3% and a slight reduction in incentives over the next few years."
In Christchurch, vacancy rates ranged from 1.6% in Hornby/Islington to 6.5% in Sydenham.
Further development of industrial properties was underway at the Wigram and Waterloo business parks, which were receiving a steady stream of inquiries at rates ranging from $200 to $335 per square metre depending on the properties' location and size.
Yields were 7.8% for prime properties and 8.9% for secondary ones, and were expected to fall over the next 12 months.
To read Colliers full report, which provides the latest vacancy and rental rates, capital values and yields for industrial precincts in Auckland, Hamilton, Tauranga, Wellington Christchurch and Dunedin, click on this link
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