Commercial

Bright spots in commercial outlook

Nearly 60% of commercial property investors think that opportunities lie ahead but they are also believe there are changes in store for the sector.

Friday, June 05th 2020

That’s according to a new Colliers International survey* on landlord and tenant sentiment about commercial property in the wake of the Covid-19.

Colliers associate director of research Ian Little says about half the survey’s respondents believe economic conditions will stabilise within a year.

“Many potential purchasers see the year ahead providing new opportunities with 58% of respondents indicating that they would like to make their next acquisition within the year.

“Creating some potential imbalance is that vendors are choosing to delay divestment until the second half of 2021.”

It seems that enthusiasm among purchasers has been boosted due to a belief that values could ease over the short term from the peaks apparent over the latter part of 2019.

Approximately 80% of respondents are picking a decline in values, Little says.

“But some may be disappointed as transactional evidence to date suggests that high-quality properties with premier tenant covenants remain in demand with limited shifts in pricing.”

Despite the comparatively upbeat expectations revealed in the survey, it also shows that the Covid-19 crisis will lead to some noteworthy changes to the sector.

One of those is the probable continuation of the rent relief that came into play during the lockdown.

According to the survey, some 80% of landlords and 55% of tenants confirmed that rental assistance packages had been agreed.

In April, 84% of respondents reported paying at least half of their rent and Colliers expects the May statistics to be similar, with 67% of landlords and 76% of tenants expecting rental payments to be the same as in April.

Little says the easing of lockdown restrictions and a move to level one could also assist as a greater proportion of tenants capturing higher cashflows would enable a resumption of full rental contract payments in the future.

“Smaller companies experiencing ongoing cashflow constraints that have been unable to negotiate what is a ‘fair and reasonable’ amount of rent and outgoings to pay, will now be able to access arbitration services via the government-subsidised scheme announced on 4 June.”

Another change could be a big increase in the number of office workers who make the move to permanently working from home.

Colliers’ director of partnerships, research and communications Chris Dibble says a majority of respondents would prefer a more flexible approach to working remotely, with 77% indicating they would like to work from home for one or two days per week.

“However, this may not necessarily translate into a reduction in office space with changes to hot-desking and appropriate floor space ratios potentially counterbalancing the situation.

“It was also interesting to note that 75% of occupiers indicated that they would retain the same footprint or increase it over the next 12 months.”

The survey also shows that the traditional office setting continues to offer many advantages, Dibble adds.

According to respondents, being able to collaborate with colleagues in person (34%), bumping into co-workers (13%) and the ability to have spontaneous meetings (12%) were rated as key benefits.

Another common view was that working from the office made it easier to separate work and home life balance (19%).

*The survey was conducted between 21 May and 4 June and drew on around 4,000 responses to create the results.

Comments

No comments yet

Heartland Bank - Online 1.99
Kainga Ora - First Home Buyer Special 2.25
HSBC Premier 2.25
ICBC 2.45
Westpac Special 2.49
SBS Bank Special 2.49
The Co-operative Bank - Owner Occ 2.49
BNZ - Classic 2.49
ASB Bank 2.49
ANZ Special 2.49
TSB Special 2.49
HSBC Premier 2.35
Heartland Bank - Online 2.35
ICBC 2.45
TSB Special 2.49
ASB Bank 2.59
SBS Bank Special 2.65
Kiwibank Special 2.65
China Construction Bank Special 2.65
The Co-operative Bank - Owner Occ 2.69
AIA 2.69
Westpac Special 2.69
HSBC Premier 2.89
SBS Bank Special 2.99
The Co-operative Bank - Owner Occ 2.99
AIA 2.99
Westpac Special 2.99
BNZ - Classic 2.99
ICBC 2.99
ASB Bank 2.99
China Construction Bank Special 2.99
Kiwibank Special 3.19
TSB Special 3.19
Heartland Bank - Online 2.50
Resimac 3.39
Kiwibank - Offset 3.40
Kiwibank 3.40
Kiwibank Special 3.40
Bluestone 3.49
ICBC 3.69
Heartland 3.95
The Co-operative Bank - Owner Occ 4.40
The Co-operative Bank - Standard 4.40
Kainga Ora 4.43

More Stories

Just 14 days until new healthy homes standards kick in

Tuesday, November 17th 2020

Just 14 days until new healthy homes standards kick in

It is just two weeks now until healthy homes standards compliance statement need to be included in new or renewed tenancy agreements.

Reserve Bank looks to bring back lending restrictions

Wednesday, November 11th 2020

Reserve Bank looks to bring back lending restrictions

The Reserve Bank plans to reintroduce loan to value ratio restrictions on mortgage borrowers from March next year following a surge in the housing market.

Tribunal divvies up blame in maintenance ruling

Friday, November 06th 2020

Tribunal divvies up blame in maintenance ruling

New Zealand’s aging housing stock and tradition of informal landlord-tenant relationships have the potential for complex disputes where fault lies with both parties – as illustrated by a recent Tenancy Tribunal ruling.

COMMENT: The importance of correct structuring

Thursday, November 05th 2020

COMMENT: The importance of correct structuring

Structuring the ownership of a property portfolio is rarely the first – or even the second - thought for new investors. But it should be, argues property accountant Anthony Appleton-Tattersall*.