Wellington prime industrial property rents fell 4.7 per cent in the past year and are picked to fall another 5.7 per cent this year.
Colliers International's February research report is also picking industrial property vacancies in the region will rise slightly to 9.5 per cent.
The figures contrast sharply with what is happening in Auckland and Christchurch.
In Christchurch, where rents rose 10.8 per cent last year, the agency is forecasting a further 5 per cent rise in the next year.
And a similar rise is forecast in Auckland, after a static year.
Vacancy rates in Christchurch and Auckland are also low at 6.3 and 5.1 per cent and set to fall in the year ahead.
"A growing occupier base recorded in our Auckland vacancy surveys, with forecasts for further economic growth, are the driving forces behind Auckland's expected rise," the research report says.
"Christchurch's industrial sector remains buoyant on the back of the anticipated Christchurch rebuild.
"In Wellington tenants are vacating older industrial space for more modern and efficient premises, leaving behind vacant and, in some cases, untenantable buildings.
"Until refurbishment or brownfield development occurs, this will drag the overall vacancy rate downwards.
"Landlords are also confronted with the growing occupancy cost from gross rents which are rising primarily due to increasing insurance premiums. This will impact net face rents, which we forecast to decline by just under 6 per cent over the next 12 months."
Colliers is forecasting better prospects for the Wellington office property market with prime rentals picked to rise 2 per cent in the next year, although that is less than half the 4.5 per cent rise expected in Auckland.
Wellington's office vacancy rate is now 14.3 per cent, down from 14.9 per cent a year ago. Colliers attributed this to a slight lift in demand from the private sector and a reduction in stock as landlords strengthen and refurbish their properties.
- © Fairfax NZ News
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