Auckland land shortage drives prices to record highs

A shortage of development-ready commercial and industrial land has pushed Auckland property prices to record highs, according to realestate.co.nz data for the 12 months to March 2026.

Auckland's industrial and commercial land values averaged NZD $1,190 a square metre over the period, the highest level recorded in at least a decade and more than 600% above where they were 10 years ago.

The pressure has also spread to built assets. The average asking price for industrial buildings in Auckland rose above NZD $3.5 million for the first time, while the average land area of industrial properties for sale fell to a record low of 1,864 square metres, down from 5,212 square metres a decade earlier.

The figures point to a market with fewer large sites available for businesses that need room to expand. Sectors likely to feel the strain include manufacturing, food and beverage, retail, logistics, technology, construction, agribusiness, data infrastructure and export-focused operations, where land costs can influence site selection, transport links and investment decisions.

Search data from the property platform suggests domestic investors are driving much of the current demand, while overseas activity has eased over the past year. At the same time, new commercial and industrial land listings fell 4% to 203 from 211, adding to price pressure when sites do come up for sale.

Sarah Wood, chief executive of realestate.co.nz, said the pattern reflected a long-running mismatch between supply and demand in New Zealand's largest economic centre. Auckland accounts for 38% of national GDP, making changes in its land market significant for businesses well beyond the region.

"What we're seeing is a structural shortage of commercial and industrial land, particularly in Auckland. There simply isn't enough development-ready land coming to market to meet demand, and that is now being reflected clearly in pricing.

"The step-change in land prices over the past two years in particular isn't typical. It reflects a situation where supply is no longer keeping pace with demand.

"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," Wood said.

Site scarcity

Stephen Hughes, chief executive of Drury South Crossing, said the same limits were visible on the ground, particularly for large industrial occupiers seeking serviced sites with transport, electricity and fibre connections.

"Businesses are placing a premium on land that is build-ready and well connected to transport modes, power and fibre. In a constrained market, those locations are becoming harder to secure, and that is flowing directly into pricing," Hughes said.

Only a small number of large industrial-zoned sites remain available across the wider Auckland region, he said.

"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 is also changing what buyers need from industrial land, Hughes said, as automation, machinery and electric vehicle fleets increase power requirements.

"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," Hughes said.

Buyer demand

Activity on the platform has also increased. Commercial search volumes rose 12% over the past year, while active users in the sector increased 21% over the same period.

Wood said the market was moving towards one in which land availability mattered more than the buildings standing on it.

"We're seeing a move toward a land-constrained market, where site availability is becoming more important than the buildings themselves.

"Our data shows new commercial and industrial land listings have fallen 4% over the past year, from 211 to 203, reflecting limited supply conditions.

"Higher land costs don't stay in the property market, they affect businesses, logistics and ultimately consumers.

"Addressing this will require faster zoning, better infrastructure and a more proactive approach to planning commercial land supply," Wood said.

She added that current demand appeared to be led by local rather than international buyers.

"Commercial property searches for sale increased 12% in the 12 months to March 2026, with a lift in engagement from domestic investors and occupiers.

"According to our search data, international interest has softened, suggesting the current upswing is being driven primarily by local capital," Wood said.

The combination of rising values and stronger search activity may point to a busier market, even though transaction volumes have been slower in recent years.

"When we see more people searching, more activity in the market, and rising values, it typically indicates momentum is building.

"If these trends continue, we would expect stronger transaction volumes through the rest of 2026.

"Over time, this risks pushing industrial activity further from key centres, increasing transport costs and reducing supply chain efficiency," Wood said.