Strong demand for Industrial leasing continues at a record rate

At the conclusion of the first quarter of 2023, the commercial property market in Queenstown has maintained a steady level of activity, resulting in strong sales and leasing activity which buck the national market trends. In this article I will cover off some key trends we are seeing in the market, as well as an indication on what we see to come over the course of the year. These predictions are only a few of the many indicators we are seeing from the commercial property activity year-to-date, so for the most accurate and up to date advice, be sure to reach out for further information.

So far this year…
Across all asset classes, purchase demand has remained strong. Colliers is pleased to be able to report a near 100% success rate for commercial properties taken to market in 2022. The beginning of 2023 has seen a similar response, albeit with transactions taking slightly longer, often being held up with enhanced due diligence being required by lenders as part of property purchases.

Industrial and warehouse stock leasing opportunities remain at a record low rate through Queenstown. Predominantly driven by trades and tourism-related businesses, there is currently no available stock for storage, manufacturing or workshop/warehouse use for lease through Frankton. This is putting upward pressure on rental levels as businesses look to maintain their current presence in this area. Following this trend, we are seeing an increase in enquiry levels on any buildings being sold with vacant possession, as businesses prefer to pay mortgages vs increased rental levels.

The CBD has seen strong leasing activity, boosted by a return of interest from major overseas brands. The opening of the O’Connells mall has cemented Queenstown’s image of being a premier tourism destination for overseas visitors.

What is to come?
While Queenstown has been well protected to date from much of the happenings around NZ, we are beginning to see the effect of interest rate increases and a shallower buyer pool of investors seeking return. We are expecting that the “flight to quality” trend will become a stronger factor in buyers’ decision making process as prime or A-Grade stock takes preference over second and third tier property. Closely linked to this is the belief that owner-occupation will become increasingly attractive for businesses – particularly with the latest OCR increase.

On the leasing front, the demand for warehouse/storage space will remain strong as businesses continue to benefit from increased interest in Queenstown from domestic and international markets. Office leasing has been active, particularly in the 150-300sqm range, which is another trend we anticipate to continue as remote/hybrid working becomes more popular.

Please free to get in touch if you have any questions on commercial activity happening within your area.