Published on: 2014-09-24
Hamilton Commercial Real Estate Update
With the elections behind us, focus now returns to the business at hand. Economic predictions remain moderately optimistic for the remainder of 2014 and beyond. The Hamilton economy grew 3% to the end of March 2014 surpassing growth in both the Waikato (1.8%) and in New Zealand (2.5%).
The Hamilton commercial property investment market remains buoyant as strong demand for good quality buildings with quality tenancies outstrips supply. Consequently, yields are being driven to historic lows as competition drives prices higher.
Seismic issues associated with commercial buildings, which are not just limited to Canterbury and Wellington regions, are proving challenging for both leasing and sales in Hamilton. The requirement for more detailed engineering reports and the requirement to meet the New Building Standard is placing a degree of pressure on landlords. However, developers are finding opportunities to renovate or re-develop C and D grade stock as there is a general flight to quality for tenants presently.
The general expansion of the Hamilton economy has increased activity in the industrial real estate. Owner occupiers are active in the industrial space. There appears to be a lack of appropriate existing buildings. What is available is largely obsolete or the layout makes it undesirable. This is forcing businesses to develop property for themselves. The willingness to do so reflects the confidence these businesses have in Hamilton and in the future of commercial real estate in Hamilton.