Commercial Newsletter

Welcome to our almost springtime commercial update

The commercial sales market is interesting to say the least. There has been approximately 13 bona-fide sale since 1 January 2023. Please click on the link to view the sales hereOf these sales we believe that 8 sales we to investors and the balance were either development sites or sales to owner occupiers. We have been marketing several investment properties over the last few months and there is a difference between what the vendor expectations are, and what purchasers are willing to pay. Obviously, the deposit rates the banks are offering at present and the cost of funding a purchase has risen considerably since this time last year has impacted on the volume of sales this year. The banks are still reluctant to fund any property that has a NBS rating lower than 67% which impacts much of our older buildings and heritage stock.

Cutlers Sales:
31 Teviot St – Industrial: Approx. 6206m2 approx. with warehouses, offices and yard space (leasehold)
89 Maclaggan St – Industrial: Approx. 412m2 of low stud warehouse, with 91m2 of high stud
150F Kaikorai Valley Road – Industrial: 290m2 approx. of warehouse with some office space

Talking with a number of valuers  and people with skin in the game and trying to get a handle on where yields are at, is a bit like naval gazing, the more people you ask the more confusing it gets, but the general consensus seems to be yields have firmed for A grade investment (modern well leased) property to between 7% and 8% and for  B grade investment property 8% plus. These yields do not apply to owner occupier purchases and have evidence that these buyers will pay a premium to secure their premises and future business plans. Please click on the link to view the CBRE New Zealand Lender survey here.

Enquiries have been slower than last year, however, have picked up compared to earlier in the year. A mixture of industrial, office and retail.

There is approximately 20,000m2 of warehouse/workshop vacant. This is on a par with what was vacant in January. A large proportion of these vacancies is 1000m2 which has proven difficult to lease. There is only about 5 premises vacant that are under 400m2. This size of premise has proved to be the most popular for prospective tenants. Rents for A grade industrial premises range from $110m2 to $130m2 plus GST and plus rates and insurance. There is the odd property that has leased at well above these indicated rents but we this this is the exception rather than the normal.

Quantify Commercial property valuers (Adam Binns) has carried out his quarterly survey of vacancies in George Street, view herewhich shows vacancies are down from his last survey. After talking with Landlords and Mall managers, we understand that there is still a downward pressure on rents in central shopping precinct.

Office Space
Ready to move into office space vacancies remain steady at about 5,000m2.  

Rents in the CBD A Grade offices are sitting around $300 per m2 with some now exceeding the $300 per m2. B Grade is approximately $240 to $290per m2, although this is harder to define. With the C Grade offices, there is less demand and tenants wanting to negotiate.  Small office spaces leasing from approximately $6,000 per office through to $10,000. These figures quoted are Gross rates. Onsite or close by car parks are also top of mind for tenants looking for office space.

If we can be of any assistance in your commercial property needs please ring Jacquie or Graham.