Encouraging Signs for Commercial Property Investment

Posted on Tuesday, March 20 2012

Commercial Property Investment In 2012

As we move towards the second quarter of 2012, we are starting to see some really encouraging signs within the industry. The industrial sector has been leading the way since last year and shows no evidence of letting up.

Enquiry for good industrial space in the likes of Auckland is picking up with many tenants finally deciding that 2012 may be the year to reposition themselves for the future upturn. It makes business sense to do this when things are perhaps a bit slower and there are still some really good leasing deals out there.

Once we get some momentum in the economy, it becomes harder to think about relocating a business as the owners are generally fully occupied with keeping up with demand. Also, in an improving economy, landlords are less inclined or compelled to be offering the sorts of incentives which have been commonplace since the GFC.

Astute business owners are fully aware of these facts and seem to be making the first moves towards finding the premises which will see them through the next economic cycle.

The same is true to a lesser extent with the office sector. We have recently been involved with two significant leases of office space, one in Auckland and one in Tauranga. In both cases, major tenants are committing to lengthy leases involving significant repositioning of the property.

Every market will experience these trends to different degrees. Auckland is certainly leading the way in terms of showing signs of life right across the board encompassing industrial, office and retail.

Some provincial centres are faring better than others and so it is meaningless to talk in general terms about signs of a recovery. What we can say with confidence though is that there is certainly a lot more enquiries around for vacant space and deals are now being struck for such space that simply weren’t occurring 12 months ago.

Certain locations and certain segments, for example, secondary office space in the Wellington C.B.D., will still be under pressure for some time on the back of Government cutbacks to the Public Service and previous developments being completed drawing tenants from existing buildings.

However, there is a real sense that this year, finally, we will see the much anticipated recovery really start to happen.

Mortgage applications are currently at a seven year high as Kiwis realise that the sky has not fallen and that money has never been cheaper.

Just as things can turn really bad in the blink of an eye, people are always surprised when things suddenly improve.

Here’s to being surprised.

D.J. McMahon
Managing Director
McMahon Commercial

Commercial Property Investment 2012




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Expert's Bio

Denis McMahon

Brought to you by Property Managers Ltd: Pacific Property has been formed with the aim of building, over time, a diversified portfolio of Industrial, Retail and Commercial properties to provide strong sustainable returns to investors which will be managed by experienced property manager, Property Managers Limited (PML). The directors of Pacific Property Fund are Denis McMahon and Philip Tushingham, who together have over 45 years of experience in investing in, and managing commercial properties. “Pacific Property presents an opportunity for investors to invest in a brand new quality industrial building in Mount Maunganui and to join us as we build a quality commercial property portfolio diversified both geographically and across industrial, retail, and commercial assets.”

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