Chch commercial property sales volumes hit record

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Sales volumes hit record levels in Christchurch as office sector soars and workers return to CBD

- Economic confidence, strong industrial and arrival of retailers and return of office workers -

Christchurch – Nearly a quarter of a billion dollars in commercial property sales in the second half of last year, is the highest level for Christchurch since the GFC and post-earthquake, according to latest research published by CBRE.

CBRE’s first quarter 2017 Christchurch MarketView report reveals 41% of the $242 million in sales volume was within the office market with an increase in levels of transactions over $5 million.

The buyer market was split among private investors, syndicates and institutions contributing 31%, 28% and 20% to purchasing activity respectively.

The trend come amidst a two year high in regional economic confidence at net 33% of Canterbury households and at time when with white collar workers returning to the CBD following building completions with existing and under construction supply estimated to total 241,000 m2 and the expected arrival of international retailers.

Tim Rookes highlighting the opening of H&M’s first South Island store in 2017 along with the Top Shop when The Crossing is completed, as being particularly welcomed at a time when retail sales have seen a 2.6% year on year decline in the December 2016 quarter.

“The CBD is fighting back aggressively against the retail destination monopoly that the large shopping malls has held since 2010. With prominent international brands in world class stores, retail within the CBD is well positioned for 2017 and beyond.

The increased focus on the CBD does come at the expense of the suburban office market according to the report, with more backfill vacancy expected to occur in 2017 due to relocations to the CBD.

With a 33-basis point yield softening in the past year for suburban office market, Rookes says the impact of the flight from the suburbs back to the CBD remains obvious.

“Yields are expected to continue to soften in Christchurch suburban office market as forecast vacancy in 2017 and 2018 provides no respite. It also means elevated incentive levels are the new standard as owners attempt to attract tenants or retain tenants which are considering relocating.”

On the development front, the report indicates there is sustained activity particularly in the west of the city, as industrial occupiers look to expand and capitalize on land availability, low interest rates and business growth.

The sustained industrial development has driven at least partially the rental declines however and with considerable development land available and the competitiveness in the development market to secure occupiers, it’s expected rentals will decrease slightly further in 2017.

Mr Rookes says while prime industrial stock still provides the firmest yields in the region they are moving towards a period of stability balanced against a number of factors.

“On the fact of it demand from investors for smaller value buildings coupled with an active owner occupier market provide an environment conducive to firming. However so far in 2017, the financial limitations from the banking sector have resulted in some of this demand falling off. We would be surprised to see further firming and expect to see yields stabilize throughout the rest of this year.”

ENDS

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