Auckland industrial, commercial land shortage pushing prices to record-high levels

Recent property data indicates a shortage of suitably-zoned commercial and industrial land in Auckland is pushing prices to record-high levels, with would-be buyers competing for development-ready sites.

Data from realestate.co.nz showed Auckland's industrial and commercial land values reached an average of $1190 per square metre (sqm) in the 12 months to March, which was the highest level in at least a decade.

The shortage of development sites was driving up land prices, while the average asking price for industrial buildings in Auckland rose to more than $3.5 million for the first time.

The average size of industrial properties available for sale also shrank to a record low of 1864 sqm, from 5212 sqm a decade ago.

The demand was mostly driven by domestic investors, while international activity eased over the past year.

"What we're seeing is a structural shortage of commercial and industrial land, particularly in Auckland," realestate.co.nz chief executive Sarah Wood said.

"There simply isn't enough development-ready land coming to market to meet demand, and that is now being reflected clearly in pricing.

Development shifts south

"This is shifting development patterns, with access to suitable sites increasingly dictating how and where projects can occur, particularly for larger-scale industrial users.

"Over time, that affects where businesses locate, how supply chains are structured, and the cost of operating across the wider economy, including the competitiveness of New Zealand's exports."

Drury South Crossing chief executive Stephen Hughes said the same constraints were playing out on the ground, with limited availability of large, serviced industrial sites across the wider Auckland region.

He said developments, such as Drury South Crossing, were becoming increasingly rare, with only a small number of large, industrial-zoned sites still available for purchase.

"We have sold more than 100 hectares of land at Drury South over the past five years, and with just 30 hectares remaining, we won't be able to accommodate every requirement. Early movers can still secure a site, but the supply of greenfield industrial land at this scale across the region is becoming increasingly limited."

Hughes said rising electricity demand was also reshaping site requirements, with many existing industrial locations unable to support modern business needs.

"It's not just data centres, it's everyday businesses needing more power for automation, machinery and electric vehicle fleets, and many older sites simply can't support that without significant upgrades."

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