The commercial market has come alive with strong investor demand leading the headlines. There is a scarcity of appropriate properties in this market: Investor preference is heavily weighted towards security of tenure. Well-tenanted properties are selling between 7.5%-8.5% (when they can be found!). However, yields for second tier properties and properties that have risk associated with re-tenanting have inflated.

It is apparent that in these low-interest times owner-occupiers are missing their opportunities. Many are looking for too big-a-bargain in a market where their holding costs have halved over the past 12 months. Frustrating the process is some conservative - rather than prudent - counsel from third-party advisers, which purchasers may rue in the coming years.

Vacancy rates have started to climb. This is particularly evident in the office market. However, the vacancy rate is still low compared to historic trends and we think this largely reflects a consolidation of business rather than something more sinister.
April 2009 Demand Returns By Dean Abraham
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Lodge Commercial part of the Lodge Real Estate Group
28 Harwood Street
Hamilton, New Zealand
Ph +64 07 858 3331

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