Surge in sales hopeful for business confidence

The beginning of the 2023/24 financial year has signalled a shift in the commercial property market, with a surge in activity and sales following one of the quietest quarters for sales volumes in recent history.

Bayleys Commercial & Industrial broker, Alex Perigo, based in Silverdale, says the latest figures on commercial vacancies (see chart below) show that leasing activity remains robust, with substantial year-onyear growth in both the number of lease transactions and their values.

“The Hibiscus Coast region is experiencing an influx of interest from national and international tenants, driven by its rapid growth,” Perigo says. “However, a shortage of suitable properties and land is currently hindering progress.”

He says the rising Official Cash Rate, which has led to increased bank lending rates and tighter lending criteria in the commercial sector, has made commercial lending a significant challenge for many investors.

“Despite higher interest rates and stricter lending criteria, banks continue to show an interest in lending to commercial owneroccupiers with strong businesses, though the increased cost of servicing these loans presents an obstacle for many.”

While some regions and specific properties buck the trends, on average, market yields (return on investment) across the country are around 5-6 percent for industrial, 6-7 percent for retail, and more than 7 percent for office properties, Perigo says.

Vacancy rates across the Hibiscus Coast region have remained relatively steady. Despite minor fluctuations over the last quarter, these rates are still comparatively low when viewed against many other parts of Auckland.

“Retail and office vacancy rates have remained consistent with those in late 2022. However, there has been a recent increase in deals and enquiries from these sectors, a trend that typically suggests a boost in local business confidence.”

Although there has been a slight increase in industrial vacancies, there is still a high demand for premium-quality properties in this sector.