Pockets of confidence are driving an otherwise quiet commercial property market in Wellington, Ben Castle, Tommy’s Group CEO, says.
“As we are well into the winter months and begin the guesswork around the election in early October, the commercial property market remains somewhat passive.
“However, there are pockets of confidence driving activity. Both buyers and sellers, landlords and tenants are managing to complete favourable transactions in the Wellington market.”
He says there have been fewer transactions this year than last, due to rising interest rates, and this looks set to continue.
At the same time, businesses are “actively addressing” quality issues with older buildings and modernising to entice people back to the office.
“This trend is more obvious for buildings with lower seismic strength and reinforced through local and central government’s mandate for NABERS and Green Star rated buildings,” Ben says.
“For properties with a perceived inferior offering, landlords and owners are creating higher incentives to maintain both rent level and tenants.
“This gives tenants more opportunity to negotiate, and with the city-fringe displaying more vacancy, businesses also have more options for their place of work.”
He says yields are starting to stabilise now the Official Cash Rate is thought to have peaked. “This is supported with the recent inflation numbers.
“However, there is still some uncertainty with the main retail banks. We have seen banks increase their lending rates based off their own costs of funding and the global interest rate levels.
“Therefore, this will further underpin the lower volume trend as buyers may wait longer to purchase a property.”
Subject to affordability and appropriate due diligence, commercial property is a sound investment, Ben believes.
“The tax deductibility and no capital gains tax implications allow for good return, whether the strategy is yield, growth, or both.
“Tommy’s Commercial are working across all property sectors in the Wellington and Greater Wellington region.
“From retail to industrial, office to land, Tommy’s Commercial have the expertise to assist.”
