With Summer just around the corner there is a renewed sense of positivity and some improved urgency in the Commercial Real Estate market.
Last month’s drop in the OCR rate, taking it now to 2.50%, is a further shot in the arm for both investors and owner-occupiers alike. While listing stock has been higher there has now been an increase in sales activity and transactions. There is also the chance of a further 25bp drop at the end of this month. More fuel for the fire.
Economic data is still a mixed bag. While the future sentiment is more positive, unemployment and inflation are still the sticky indices. Unemployment, most recently reported at 5.3%, is thought to have now peaked and some business surveys, particularly in manufacturing, seem to point to a more positive labour market moving forward.
On a macro basis, the Ag sector is still the bright light. Despite recent retrenchment in the global dairy auctions the forecast farmgate dairy payout is still above $10. With the USA this week announcing the removal of tariffs on NZ beef there is pricing certainty and increased optimism. The recently approved sale of Fonterra’s consumer brands business will also inject cash into that sector. That will have a wider impact than just the rural sector.
Leasing does remain soft, relative to sales activity. Having choice, proactive tenants can get better quality properties at fair rents. This is likely to start to change in the New Year.
Residential activity is still improving and it feels like the October OCR drop has definitely stimulated the market. Pricing also feels like it is staring to move translating to more activity in the higher value brackets. This is a fantastic time for residential buyers to “upgrade” before the compressed value gaps open up again and while there is still that ability to lock mortgages in for a reasonable duration, well below 5%.
We are also pleased to report that Sarah Sheehan has settled into her role as our Commercial Property Management. Sarah is ready to provide you with A+ service so please reach out and she can explain to you the added value she can create. Lodge Commercial can now complete the full service offering – agency (leasing and sales), body corporate and property management.
We would also like to take this time to thank you all for your continued support and wish you and your families all the best for a safe and enjoyable Christmas season. We look forward to working with you again in 2026.
If we can assist with Commercial Leasing and Sales, Body Corporate or now Commercial Property Management needs then please reach out to your preferred agent.