Will confidence in Wellington’s commercial property market pick up post-election?
“Naturally, the future of the country is on everyone’s minds at present,” says Ben Castle, CEO of Tommy’s Group. “Which way the voting goes is always unknown until voting day, and a similar sentiment is bubbling within the commercial property market – where will we go?”
Castle notes that the pre-election tension has impacted transaction volumes. Coupled with the well-publicised interest rate situation, sale numbers remain passive. “Although there is a sense of confidence that the market is turning, the proof, like the election, is in the numbers,” he says.
Recent commentary suggests that interest rates will remain at current levels for some time. The challenge for owners and investors is that the asking yield may not reach the levels required to support both buyer and seller demands. “This will reinforce a potentially slower tempo of sale transactions post-election and into 2024,” Castle predicts.
In Wellington’s lease market, the continued flight to quality prevails as businesses seek high-quality NBS grade buildings that prioritise sustainability and support hybrid working if needed. “The government footprint, around 36 per cent, is significant, and agencies are making decisions on their future property options. It is expected that government tenancy will remain stable regardless of the election outcome, meaning occupancy will continue to grow as landlords upgrade properties,” Castle explains.
He anticipates that commercial development may pick up as confidence returns, though with more caution in assessing the feasibility of projects. Despite economic factors and election outcomes, Castle points out that the market will always transact.
“It is not doom and gloom by any stretch, and history shows that property cycles are fundamental to the industry. How long we remain in a cycle can feel a bit like guesswork – just like who will be sitting on top on October 14 – but I believe we have seen the bottom, and it is now about how fast we rise.”
Tommy’s Commercial operates across all property sectors in the Wellington and Greater Wellington region. “From retail to industrial, office to land, Tommy’s Commercial has the expertise to assist,” Castle assures.
