27 Feb 2023

Rents rising for commercial property as demand picks up

10:45 am on 27 February 2023
AUCKLAND, NZ - MAY 29:Traffic on Queen street with the Skytower in the background on May 29 2013.It's a major commercial thoroughfare in the Auckland CBD, New Zealand's main population center.

Queen Street's pedestrianisation is partly to thank for the retail rebound, JLL says. Photo: 123rf.com

Demand for commercial property is picking up, with rents rising in the major centres.

JLL's latest commercial property snapshots report highlighted a rebound in demand for retail space in Auckland.

"With the recent pedestrianisation of Queen Street, workers returning to the office and the restart of tourism, we've already seen retail vacancy rates steadily decrease," JLL NZ's head of research Gavin Read said, adding office vacancies also fell.

Industrial property demand was continuing, with South Auckland rents up 16 percent and similar demand in other major centres, including Christchurch.

"While Christchurch still has reasonable land for future development, a significant proportion of this is land-banked by developers, so industrial space is expected to become scarcer over the next few years," Read said.

Wellington's commercial rents were also up, despite an increase in vacancies with 5719 square metres of additional space.

Read said there was also a trend to renovate or repurpose commercial property, with investors motivated by net zero emissions targets.

"Most developers are now looking at how to refit or repurpose commercial property rather than demolish and build new."

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