In the current New Zealand property landscape, rising rental rates are making it increasingly difficult to secure affordable long-term leases.
After closing 2023 with a 15.3% YoY increase, rent rates are still projected to rise, where occupiers that have upcoming market rent reviews could be faced with up to a 40% increase. This, combined with a shortage of available sites, poses significant challenges for companies amidst growth.
The costs associated with industrial sites extend beyond just rent; transportation expenses, labor costs, and other operational overheads further add to the financial burden.
With transient yield in the New Zealand industrial property sector on the rise, companies are finding it hard to secure stable and cost-effective locations for their operations. Availability of industrial land exacerbates the issue. With limited options, businesses are left scrambling to find suitable spaces that meet their needs without breaking the bank.
So, what’s the way forward?
Integrating supply chain strategy with industrial property solutions offers a way forward, as the network strategy and property solution are intrinsically interlinked.
Property serves as the infrastructure backbone of the supply chain network, providing flexibility in distribution and transportation, and facilitating the flow of goods from distribution center to end customer. Therefore, the strategic location of a business's property plays a pivotal part in the efficiency of their supply chain network.
With this in mind, reviewing the entire supply chain network prior to investing in an industrial real estate solution allows for:
- Greater visibility over your end-to-end journey
- Maximized network efficiency
- Cost management
- Workflow enhancements
These benefits allow businesses to readily adapt to supply and demand dynamics and navigate the ever-changing market conditions with agility.
Furthermore, by leveraging advanced technology, such as simulation, businesses can predict their future state supply chain scenarios both within the facility and wider network, allowing them to pressure-test solutions and establish the most efficient network. This can save costs by right sizing a future property footprint, further increasing productivity and reducing operational expenses.
Ultimately, ensuring a synergy between the supply chain strategy and industrial property solution, provides opportunity to mitigate the challenges posed by the current property market landscape in New Zealand.