Prime Retail Sector Leads The Way As Demand For Quality Drives Christchurch Commercial Real Estate Growth

The latest Market Snapshots from commercial real estate consultancy JLL paint a positive picture for the future of the Garden City.

The Snapshots analyse activity within the industrial, office and retail property sectors in New Zealand’s three main centres through the second quarter of 2023. While there are positive trends for Christchurch across all three sectors, JLL NZ’s Head of Research, Gavin Read, says the CBD’s retail market in particular stands out with rents rising and vacancy falling.

“Prime rents in the central city have increased significantly through the year, with upper end rents up by $100 per square metre this last quarter – and we fully expect these top end rents to hit $900 per square metre by the end of the year.”

The CBD registered a fall in vacancy rates, despite over 5,500 square metres of space being added to the city’s retail stock over the last few months. However, the story was slightly different outside of the CBD with the Victoria Street and ‘Fringe South’ precincts both experiencing small vacancy increases.

Rents and vacancy have remained fairly static in the industrial sector through the first half of the year. But with approximately 60,000 square metres of leasable space having been added to the city’s stock this last quarter, Read says he anticipates modest positive movement for both by the end of the year.

“We can see average prime industrial rents increasing by $5 per square metre as demand for quality warehouses near arterial routes intensifies and large-scale occupiers start to move from secondary warehouses to better quality premises.”

The demand for quality premises is also visible in the office market, where a 1.4% fall in prime vacancy has been mirrored by an increase in secondary vacancy.

Investor interest is also increasing in this market with two notable transactions taking place this last quarter: 151 Cambridge Terrace, which sold for $36.5M at an initial yield of 6.20% and 12 Oxford Terrace, which sold for $16.75M. JLL Head of Agency – Christchurch, Ben Cameron, says recent activity at the lower end of the market indicates investors are seeing a rebound right around the corner.

“The investment market is highly liquid at certain price bands, specifically in the sub-$3 million market – and the increased level of activity and investor enquiry at the lower end of the market demonstrates confidence of a possible rebound.”

“The capital markets, with assets at the higher price points, are still in an expanding environment with cost being the biggest driver of softening yields.”

– ends –

JLL’s Q2 Market Snapshots are available for download here:

• Retail
• Industrial
• Office

© Scoop Media