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Industrial property has been the highest performing commercial property class over the last 15 years in New Zealand. Industrial has consistently outperformed the returns of the other two commercial sectors, office and retail.
Without the volatility of other investment classes, industrial property is an attractive investment option through a managed fund, or through direct investment.
*Source: Morgan Stanley Capital Index (MSCI), year ending June 2023.
I’ve had a lot of experience in industrial property. When I saw the approach Carl and Jack were taking, I was excited to help navigate their next phase of growth.
MALCOLM MCDOUGALL
Director / Investor
Industrial Property Investment is in a class of its own
Analysis of industrial property investments in New Zealand demonstrates that returns outperform all other commercial property sectors.
Industrial properties, that is, property used for manufacturing, processing, and warehousing purposes require tenants to invest into machinery, equipment, warehousing systems and more, which are well considered investments to future-proof their business. In doing so, industrial property tenants tend to opt for longer term leases, with average tenures exceeding those of their office and retail components.
Retail and office property portfolios can be more susceptible to vacancies in an economic downturn, demonstrated recently with government-imposed lockdown, and the flow-on effect on retail and office demand. Retail shops can be replaced by online stores, driving the need for warehousing – a continuing trend. In the office-investment space, hybrid or flexible working arrangements have meant people are able to operate from home, partly reducing or removing the need for office space.
Demand for well-located factories and warehousing continues through most economic climates and cycles because industrial buildings house businesses that are essential to everyday kiwi life.
High Quality Assets
Our property funds invest in mid-sized ($3-10 million) industrial properties located in growth areas that have stable economics, with some of the lowest vacancy rates in New Zealand. It also pays to remember that even during economic downturns, commercial spaces such as shops and offices may close or cut back, however, our country will always rely on factories and warehouses, so it makes sense that industrial property investment is one of the most sound investments you can make.
At Provincia, we focus exclusively on industrial property — a sector known for its stability, strong tenant demand, and consistent returns.
Our focus:
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Prime locations – High-growth industrial areas close to key transport routes.
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Quality tenants – Established businesses in essential and growth industries.
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Stable income – Reliable rental streams supported by long-term leases.
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Value-add potential – Opportunities to enhance income and capital growth.
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Active management – Proven expertise through our in-house property management team.
Whether you invest through one of our Funds or with our Private Client service you gain access to institutional-quality industrial assets backed by expert management and a proven track record.
FAQs
Industrial property offers stable rental income, has strong tenant demand and long term capital growth. It is underpinned by essential sectors like logistics, warehousing and manufacturing.
Returns are also usually higher that residential property as the tenants generally pay for all expenses such as rates and insurance.
Compared with retail or office assets, industrial property typically has lower vacancy risk, lower maintenance costs, and more flexible building use. Tenants also tend to stay longer due to the cost of relocating heavy equipment or logistics operations.
Benefits of industrial property include:
- Longer lease terms. Leases are often signed for terms ranging between 2 to 10 years.
- Tenants cover costs. In many commerical leases the tenants pay a significant portion of the the property expenses, includling rates, insurance and maintenance. In residential these costs are paid by the landlord.
- Low maintenance and operating costs. This is because the properties tend to be simple, and any fit out is usually the tenants.
WALT stands for Weighted Average Lease Term. It measures how long the current leases will run on average. A longer WALT generally means more income stability for investors.
Each property purchase is carefully assessed against a strict criteria – including tenant strength, lease term, building quality and location.
Like any investment, there are risks — such as tenant default, market shifts, or rising interest rates.
We focus on properties in high demand areas, so that if a tenants defaults, we are able to find a new tenant.