October 2021 - January 2022 Zealand during 2021 to date remains the GIC acquisition of the half share of the ANZ Centre in Auckland CBD. This excludes local partners purchasing on behalf of offshore sources. Listed REITS and fund managers that have previously been priced out of
market
and has some est vacancy ally
certain opportunities are now increasingly looking at partnership agreements to efficiently acquire assets. Strides Industre fund with JP Morgan and Centuria’s acquisition of Augusta are two public representations of these partnerships. Sales campaigns are see-
mandates. - Stride acquired the Deloitte Building in Wellington for NZD$288m at a 4.5% initial yield in November 2020. - Precinct Properties' recent acquisition in Wellington of the Bowen House and the Freyberg Building for NZD$92m and NZD$49m respectively. - In Christchurch, Manawa Building and the PwC Centre in Christchurch were sold for NZD$80m and NZD$60m respectively during 2H20. With limited core assets available to purchase, build-to-core strategies are also rising in popularity. Auckland for example is expected to deliver over 140,000 sqm of prime grade accommodation over the next 5 years, notable projects include 1 Mills lane (25,0000 sqm, A-grade) and 3-15 Albert (15,000 sqm, premium grade).
20%
15%
10%
5%
Source: JLL Research 70 propertyandbuild.com
Houston
Chicago
Dallas
Atlanta
Denver
Perth
Seattle
San Francisco
Adelaide
Brisbane
Philadelphia
Boston
Melbourne
New York
Sydney
Warsaw
Toronto
Stockholm
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Auckland
0 London
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(especially those in less favourable locations) when compared to prime assets. Investors, both domestic and offshore, are looking to acquire core assets with strong tenant covenants and long term WALTS. With current border restrictions and isolation procedures in place for international investors, an opportunity has presented itself for local capital in 2021. Except for one transaction, all deals above NZD$30 million in 2021 have been by domestic capital. With pipeline difficult to acquire, especially in Auckland, investors are looking to other cities for opportunities. Recent transactions in Wellington and Christchurch have shown a willingness to acquire at low yields for the right assets that match their
25%
Paris
ly as
Office market
30%
Canberra
re ew
strongly during 2H20 as the economy quickly recovered from the initial impacts of Covid, up 115% h-o-h from 1H20 reaching NZD$3.18b. Industrial assets were the most sought after, contributing 46% to the overall 2020 transactions. Since 2017, 2H sales have
Figure Global mature office markets vacancy rate (2Q21)
Christchurch
s New
The way New Zealand has managed COVID to date has lessened the impact to the New Zealand office space, when compared to several offshore markets, and has helped New Zealand have some of the lowest vacancy rates globally as of June 2021. Wellington has the lowest vacancy rate of 5.1%, followed by Christchurch 6.3% and Auckland 10.6%. Vacancy rates are expected to rise more in the secondary assets
Wellington
COMMERCIAL PROPERTY
ave been high in New 2021, although are Re-entry rates have been high in mpacted 3Q21 due to the New Zealand to June 2021, although are expected on the 17 August. At theto be impacted 3Q21 due to the Delta outbreak. his impact is Atexpected the time of writing this impact is expected t term in nature, and to be more short term in nature, and investors will look ok throughthrough this short-term this short-term outbreak as y keep their eyes ontheir theireyes on their medithey keep um to long-term strategies. -term strategies.
ing an increase in off-market structures, especially in sale and leasebacks to protect vendor interests. Agencies are being trusted to execute these processes given the pools of active capital able to invest at low yields. Transactions rebounded
