Published on: 2015-01-20
Hamilton commercial real estate outlook
Commercially economic predictions for the Hamilton market remain moderately optimistic for 2015 and beyond. The Hamilton economy grew 3.4% to the end of June 2014 surpassing growth in both the Waikato (3.1%) and in New Zealand (3%). As a result, 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.
Whilst seismic issues associated with commercial property continue to place a degree of pressure on landlords developers are finding opportunities to renovate or re-develop C and D grade stock. There is a general flight to quality for tenants presently which is driving the refurbishment and redevelopment and we expect this to continue through 2015.
The general expansion of the Hamilton economy has increased activity in 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 the city. We expect more of the same throughout 2015.