With the first quarter behind us, we take the time to reflect on the commercial property market and provide a quick update for you.
Commercial property sales around the country continue to fire. No doubt this comes down to New Zealand’s stable and growing economy, along with incredibly low interest rates.
While Auckland’s residential market has taken a breather lately, this has not been echoed in the commercial scene. Conditions remain excellent for investment and we cannot see this changing anytime soon.
Available office space is still not matching demand, in turn continuing to push rents up. Record low vacancy rates continue in the industrial sector, at less than 2%. Land availability and pricing continue to be the issues at play here, with demand outweighing supply (keeping it favourable for landlords). Meanwhile the retail sector is facing significant increase in supply (with all the projects currently under construction). This will help ease restriction on retail leasing opportunities in some of Auckland’s more upmarket precincts, but could it lead to higher vacancy rates?
Another thing we have noticed is a slight turn of the tide when it comes to sales method of commercial property. Until recently, auction has been the front runner. Auction is a difficult environment due to uncertainty around price expectations and the need to have your due diligence completed without a secured position. Viranda has welcomed back a trend towards tender as a sales method, as well as deadline private treaty. Under this approach, Viranda targets opportunities and negotiates favourable outcomes for our clients.
Other trends to watch will be Labour’s position on capital gains tax. Will that uncertainty lead to more opportunity? Also, given the uphill battle lately in Auckland’s residential property markets, investors may lose appetite for that space and consider commercial as a more lucrative option. In turn, this could push up entry level commercial property investments.
“Regardless of all the possible influences at play, it is crucial to secure the right asset for your situation, which is where we can help. Viranda is committed to presenting the best possible opportunities for you, well-researched against market conditions, returns, risk, cashflow and so on,” says managing director, Mark Bridgman.
Viranda believes the current climate is enticing, with many compelling reasons to maximise the position you are in.
With this in mind, how can we help?