New Zealand Industrial market update Q1 2026

See a below summary of the biggest trends within New Zealand’s industrial leasing and investment markets for Q1.

 

Leasing market

Leasing conditions stabilising

Demand is becoming more selective, with fewer requirements from major occupiers. Increased leasing stock and longer timeframes are expected to push vacancy slightly higher as large-scale developments complete. Conditions are stabilising and improvement is expected as the economy recovers over the next year.

Rental growth flat with incentives nudging higher

Market rental levels remain broadly stable across most locations. Elevated stock from recent developments is limiting upward rental pressure, with higher incentives offered to secure tenants. Despite this, tenants face potential increases when leases reset to market at review.

Opportunity for smaller format premises

The past development cycle mainly focused on large-scale premises or micro industrial. The market has seen persistent demand and arguably underdevelopment of smaller-scale premises (500 to 1,000sqm) in well-located areas, which may prove to be an opportunity for developers in the coming cycle.

 

Investment market

Investment market back to neutral with yields stabilising

Broker sentiment indicates the industrial market has stabilised in neutral territory following a significant recovery. Enquiry levels and competitive bidding are increasing for realistically priced assets. Stabilised yields are attracting smaller investors seeking higher returns than term deposits.

Transaction volumes limited by stock and pricing alignment

Sales volumes are improving from recent lows but remain subdued due to limited quality supply and vendor price expectations. Increased activity is strengthening sales evidence, supporting valuations and narrowing buyer vendor price gaps. Buyers remain highly selective, with more activity expected early in the year.

Development feasibility improving, supply risk remains

Lower construction costs are improving development feasibilities, though leasing demand remains the key constraint. Developers remain confident that long-term supply shortfalls will persist.