2013 Recovery In Commercial Real Estate

Posted on Monday, March 11 2013

2013 To Strengthen The Commercial Property Investment Sector

The activity which we saw in the last quarter of 2012 has carried through into the first quarter of 2013.

The Auckland residential market is overheated on the back of a number of factors including demand from immigrants and low interest rates and the confidence which this engenders is flowing through into retail spend.

There is no doubt that Auckland is seen as the engine for growth which is driving a revival of business confidence.

This confidence finds expression in tenants seeking out new premises and the creation of new businesses requiring space. Vacancy rates are reducing across all sectors of the Auckland commercial and industrial market as are the leasing incentives being offered to tenants by landlords. This is nothing more than a rebalancing of the market which has been a tenant’s market since the GFC. It is certainly not completely a landlord’s market again but the pendulum is at least moving towards a healthy equilibrium.

New Zealand Commercial Property Investors May Face Vacancies

The most severely affected properties across the board are category C & D types which are no longer attractive to tenants at any price. The owners of such properties have the option of doing nothing and living with permanent vacancies or demolishing and rebuilding or upgrading to at least a B grade property.

The dilemma is that rentals are still not strong enough to warrant this but it is a case of do nothing and perish for certain.

The provinces have generally not seen the benefits of the Auckland property flow through to them as may have happened in the past. They all have their own regional issues to contend with, notably the effects of PSA in the Bay of Plenty and now drought in the Waikato.

Having said that, we are still seeing an uplift in activity, both in terms of leasing and sales, in these centres.

New Zealand is seen as a “safe harbour” for overseas investment with our robust title and legal system and our strong banking system.

We fully expect overseas interests to be very prominent in underpinning the commercial property markets performance in 2013.

Denis 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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