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Office, This Years Leading Contributor to Transactions

Office, This Years Leading Contributor to Transactions

The New Zealand property market in 2013 has seen the largest value of stock transacted in any year since before the global financial crisis.

Jones Lang LaSalle has completed in depth analysis covering all large scale commercial property transactions that occurred in the New Zealand market in 2013.

The underlying data shows that the commercial property market in New Zealand has seen a major uplift in the volume of sales with over $2 billion transactions in 2013, the largest annual transaction total since before the global financial crisis, 2007.

This coincides with data recently released by Jones Lang LaSalle Asia Pacific, showing that 2013 was its strongest year on record for commercial real estate markets with direct investment reaching $126.7 billion (USD) by the year end. Transaction volumes over the year were up 29% on 2012, surpassing the previous record of $120.5 billion (USD) in 2007.

The biggest contributor to the New Zealand overall total was office transactions, making up 42% of all sales volume and totalling over $1.1 billion for the full year. This compares to $427 million for 2012. Some of the larger sales include 1 Queen Street which was sold for $103 million; No. 73 Remuera Road was sold for $100 million and the $92.6 million sale of 125 Fanshawe Street for Fonterra’s new headquarters.

Justin Kean, Director of Research and Consultancy at Jones Lang LaSalle says, “The figures show that we are currently moving into a new stage in the market cycle. Capital continues to seek a home and is finding it in the office sector. With vacancy continuing to fall across most office stock purchasers believe that this is likely to manifest in upward rental pressure over the next 12-18 months. We would be inclined to agree.”

The Industrial market also had a strong year with over $386 million dollars’ worth of property being transacted, the largest since 2009, making up 25% of the sales volume. It has also seen the largest number of transactions greater than $20 million, which were mainly sale and lease back arrangements. These include Cardinal Logistics, VIP Plastic Packaging and Tegel Foods.

Sam Smith, National Director of Industrial Sales and Leasing says, “We have seen a sustained investor appetite in the industrial space over the last 12-18 months. As conditions recovered through 2013 it became clear that the industrial sector would benefit from increased confidence and a low interest rate environment. This momentum is set to continue into 2014 with scarcity of stock becoming a major issue for many buyers.”

The Retail market has seen a decline in overall numbers with total sales values now down 15% to $374 million. This is largely due to the previous year’s retail numbers being buoyed by several large sales including three of Westfield’s Mall portfolio.

Auckland continues to remain the main hub of activity in the commercial property space accounting for 80% of total sales volume in 2013. Wellington remains in second place with approximately 13% of all deals, with the remainder of New Zealand taking up the rest.

The + $20 million dollar price spectrum was the strongest performing market segment for 2013, up 30% from 2012 with large privates and corporates taking the opportunity to secure large prime property as liquidity returned to the market.

Over the course of 2013, private investors continue to make up the majority of purchases, with corporate in second place and listed property coming in third place.


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