With owners guarding investment grade stock in Auckland, investors are being starved of the opportunity to enter or consolidate a larger presence in the commercial and industrial property sector, according to Bayleys.

Scott Campbell, general manager Auckland commercial and industrial and the firm’s national director industrial and logistics, says despite Bayleys recording creditable transactional activity off the back of subdued economic conditions in an industry context and often outperforming other agencies, Q1 2025 all-agency data showed the lowest volume of sales in 31 years reflecting a dire lack of stock.

“Investment grade stock is simply not there to sell, and while we know such properties do tend to be long-term holds, the supply to the market is really constrained currently.

“The recent sale of industrial assets like Goodman’s 169 Bush Road, Albany leased to NZ Post for 20 years which attracted attention from offshore capital but sold to a New Zealand investor for $89m, and a facility at 38-44 Dalgety Drive, Wiri which was purchased for $120m by an off-shore investment group for redevelopment, shows the weight of interest for industrial properties with scale.

“There’s plenty of liquidity out there among investors, and they’re hungry. With real after-tax returns diminishing for money on term deposit, and other investment classes faltering, the commercial and industrial sector has the potential to fly – if we had the stock.”

Campbell says yields across the sector have stabilised, suggesting pricing adjustment has worked its way through the market and rents have steadied.

“There’s been a lot of store put on OCR drops, and it feels like people have been lurching from one central bank announcement to the next. We’re well into the new interest rate cycle now and banks have been incrementally pricing in cuts.

“Getting more commercial and industrial stock to the market is needed to kickstart investment activity again.”

The last few years of domestic and global economic uncertainty and more latterly the rolling impact of Trump administration directives, have spooked some occupiers and cost escalation has also put the brakes on speculative development across asset classes. However, Campbell says talk among developers is now turning into action and there are some encouraging signs.

“Softening construction costs, better funding dynamics, and generally better confidence in the market means developers are out there looking for the next project, while those that were bold enough to keep building through the downturn will be well-placed to benefit from the next property cycle.

“Sales of industrial land are gaining momentum with several larger parcels now under contract or with exclusive purchase rights, mainly to offshore investors or developers. Industrial-zoned land supply is constrained though which will put upwards pressure on existing stock, particularly for A-grade assets.”

There is also a scarcity of high-quality investment opportunities In the Auckland CBD and city fringe markets, with conditions across the Auckland office and general retail sectors remaining largely neutral and with limited transactional activity year-to-date.

“Momentum is gradually building on the leasing side though, particularly at the conceptual and early negotiation stages, suggesting a more active leasing environment as the year progresses.

“Demand for prime-grade corporate office space remains robust, yet supply is increasingly constrained. This ongoing shortage is helping to underpin rental levels for quality assets, while the revitalisation of the city’s midtown precinct due to the pending City Rail Link opening is resulting in some repositioning of tired commercial assets which will improve market supply.”

Campbell says supermarket-anchored centres and the large format retail (LFR) sector are “running their own race” as evidenced by the recent sale of the Manukau Supa Centre which received more than $1.3billion in offers, and sold for $161m to a New Zealand entity.

“Retail is a mixed bag so while LFR continues to draw strong demand from both domestic and offshore brands, underpinned by solid fundamentals and scale advantages, traditional high street precincts—such as Ponsonby and Newmarket—remain under pressure, with soft tenant enquiry and slower leasing velocity as occupiers remain cautious in the face of shifting consumer patterns.”