Positive Signs From JLL’s First Market Snapshots Of The Year

Published: Fri 25 Feb 2022 09:11 AM
February, 2022 – The latest market snapshot data from JLL (for Q4 2021) points to ongoing commercial real estate sector resilience across New Zealand’s biggest cities and scope for greater activity through 2022.
Industrial remains the most sought-after asset class in New Zealand, with vacancy and yields hitting record lows in Christchurch and Auckland respectively. Meanwhile, the office market continues to demonstrate that any talk of its demise has been greatly exaggerated. Auckland’s slight increase in prime office CBD vacancy has been offset by movement in the other direction in the city fringe and Southern Corridor, and Wellington’s prime office vacancy has now slipped below 1%. Even retail, hit so hard by the pandemic, is exhibiting positive symptoms as leasing momentum grows in Auckland’s CBD around current and future transport nodes.
Of course, it’s not all good news. Rent for secondary office stock in Auckland is down and facing further downward pressure, while the Capital’s retail sector continues to suffer from fallen foot traffic.
Looking ahead to 2022 and an easing of border restrictions, JLL NZ’s Head of Research Gavin Read expects momentum to gather pace across all asset classes, although he warns that the pace of post pandemic recovery may not be even.
“While market activity for sub-sectors will continue to be driven on an opportunity-by-opportunity assessment basis, cross-border investments into New Zealand should recover with increased travel and accessibility supporting transaction activity,” says Read.
Highlights from the latest snapshots (links to full reports below) include:Auckland
OfficeVacancy up slightly in CBD but down in city fringe and southPrime rents steady but secondary rents down and facing further downward pressureLimited new supply will continue to support strong prime rents and low vacancy
IndustrialVacancy down (to 2.3%) and rents up, with strong demand for modern facilities that fit with corporate efficiency and sustainability strategiesSecondary assets with under-utilised land targeted by add-value investors and developersYields remain at historic lows as sector remains most sought-after by investorsOver 100 new builds in pipeline for South Auckland over next four years
RetailRise in CBD vacancy belies positive leasing momentum in CBD – particularly around transport nodes and waterfrontPositive impact of CRL already seen in increased interest further up Queen StreetSuburban market holding up wellWellingtonPrime office vacancy falls below 1%; demand sees secondary stock vacancy fall to 7%Industrial vacancy at 2.1% with limited additional supply in pipelineRetail vacancy on rise in CBD due to falling foot trafficChristchurchOffice supply remains behind demand, with companies seeking to relocate having to consider secondary spaceIndustrial vacancy lowest since 2014 at 2.6%, but scope for development growthRetail benefited from fewer regional restrictions in 2021Read the full reports below:
Q1 2022 Industrial Snapshot
Q1 2022 Office Snapshot
Q1 2022 Retail Snapshot

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