Latest BNZ Confidence Survey - Non-Residential

[muppet]

Real Estate – Non-residential
• Industrial property leasing and they are flat at present
• Commercial Property Leasing: Lots of inertia in terms of trying to get businesses to commit to premises.
Shorter lease terms being negotiated. Sales - slowly improving but industrial and office markets still tough.
Retail improving thanks to Asian interest.
• Property investment - provided your tenants stay afloat you are benefiting from the lower cost of funds.
Property development - still very hard to get anything off the ground. Pre sales much harder to obtain
• Commercial property is looking pretty sad...
• Commercial Real Estate - marked improvement since 2008/09 YE. Better confidence levels amongst
businesses and good owner-occupier enquiry from small businesses on the back of low interest rates.
However, high vacancy levels, tenants till seeking large rental incentives and a lot of sub-lease space on
the market, 2010 we feel will be steady but feel that it will be another 12 months until demand catches up
again with supply and development recommences.
• Commercial property, tenants are still struggling to make the rent payments, some landlords are
recognising this and giving relief, no rent increases, rent holidays etc., but some new players are coming
into the market looking to rent. Sales are slow, banks are risk adverse, requiring higher capital investment.
Optimistic caution.
• Dunedin
Commercial - little activity here and in Central - focus on tenant management and good buildings closely
held. Yields have eased and reflect type of property/quality. A lot of property maintenance on going to
retain tenants - vacancy levels just above norm with poor quality spaces unlikely to be utilised in the next 2
years. Rents stable after a period of catch up from the late 90's - unlikely to see rises until supply demand
tips to demand stage in 3 yrs? time. Long time investors are cashed up waiting on possible opportunities
once rate rises tip property under stress on to the market. I note intense interest in Auckland property in
the 3-5m zone from cashed up investors [family trusts etc] - several deals done mid last year and still
interest shown by Dunedin investors.
• Commercial Real Estate - Retail. 100% better than the start of last year. Plenty of inquiries from retailers
looking to expand. However we will still see a number of retailers going bust, freeing up space for the
leaner/profitable retailers
• Commercial property development - a cautious but positive increase in enquires to both lease and
purchase. We are definitely more optimistic in our ability to lease our vacant units over the next few
months
• We have seen a strong increase in people wanting to invest and make commitment to leases. But most
deals are protracted, negotiations commencing at different ends of the of market value expectations
• Retail property - slow but picking up - mixed sentiment depending on category
• Commercial Property Leasing: I don't see any change in the rental income or demand for more commercial
property

[Mr_bond]

Some interesting comments in there, overall a more mixed picture than I would have expected. However not as mixed as the residential comments!

Overall felt quite positive after reading all the commercial comments, sort of the start of the property recovery picture?

Might have read this too soon after my morning caffine hit though.