Immigration to Christchurch and a renewed city centre has boosted confidence in the commercial property market, a property firm says. Photo: 123RF
Christchurch is dominating the commercial property market, with some of the lowest vacancy rates in the country.
Property firm JLL New Zealand's managing director, Todd Lauchlan, said it was due to post-quake developments.
"The whole city centre has been completely renewed, and there's been a lot of domestic and international immigration down to Christchurch, so the confidence down there is pretty strong, and vacancy rates are falling, rents are going up, and demand is pretty strong,"
It comes as a substantial freehold property at the heart of Redcliffs' commercial centre has become available for redevelopment, which is being seen as a rare opportunity for developers.
The vacant former New World supermarket spans 2,796m² on a prominent corner location with a 2,309 m² building.
Colliers director of investment sales Courtney Doig said it was one of the most significant redevelopment prospects to emerge in the coastal community.
"This is a rare chance to secure a substantial holding in the heart of Redcliffs and developers have the flexibility to exploit various options from retail and healthcare to community services or apartments," she said.
The waterfront suburb has in recent years transformed and is now attracting young families and couples.
"Redcliffs continues to be one of Christchurch's most sought-after areas, renowned for its scenic setting, strong community feel and affluent residential base," Doig said.
Wellington, in contrast, has struggled, Lauchlan said.
"A lot of the government sector has been retracting over the last 24 months, and that's had an impact in terms of vacancy rates, so there's a lot of vacancy in the office market there and we're expecting that to probably get worse, before it gets better.
"That has led to a commensurate reduction in investment demand down there and the prices have been relatively muted, so I think, it's probably the toughest market at the moment."
There was still demand, if not as strong as previously, and occupancy store levels remained high.
Auckland was continuing to do well, especially in the industrial sector.
"The demand's strong, the vacancy is low, the rents are still going up and we're still seeing a lot of transactions come through and were not too far away from where they were at the peak in terms of pricing.
"So it's probably in line with the overall economy, you're seeing the different urban locations, reacting and the market being very linked to how the economy's performing and how people feel about things," Lauchlan said.
He said 2023 and 2024 were relatively tough years for commercial property with volumes from peak to trough down about 40 percent.
From then there a 5.4 percent increase year on year. "And we're expecting it to be up another five-to six percent this year."
The market would be in a recovery phase for the next 12 to 18 months, thanks to interest rates dropping from their peaks.
"And that's, for us, a catalyst for investment, new development, and a bit more confidence in the overall economy in the overall sector."
Lauchlan said 2026-27 were expected to be very strong years for commercial property.
