Retail vacancy in Wellington’s CBD drops in 2018

The high levels of tenant demand in Wellington’s CBD have pushed overall retail vacancy rate to a record low in 2018.

The latest figures from Colliers showed retail vacancy in 2018 in Wellington dropped to 6.1 per cent compared to the 6.8 per cent in 2017.

In Auckland’s CBD, however, there was an increase in vacancy from the 3.4 per cent in 2017, it jumped to 3.9 per cent in 2018.

But, according to Colliers, with New Zealand’s population expected to go up this year to five million people, vacancy rates might go down.

The United Nations’ updated long-term population projections show that while growing at a slower pace, world population is expected to reach 9.7 billion in 2100 and could peak at nearly 11 billion by 2100.

“While New Zealand’s population, which is expected to go through five million people this year, is some way off these numbers, a low, medium and high forecast puts us at 4.2 million, 6 million or 8.3 million people by 2100,” Colliers said.

“Given the past trend in population since the 1950s, we could be on track to reach the high estimate (or more).”

Colliers said with almost half of New Zealand’s population currently residing in the Golden Triangle of Auckland, BOP and Waikato, if it does reach 8.3 million people nationally, this could see 4.15 million people living in the Golden Triangle in the future.

“We will need a lot more houses, factories, storage facilities and shops in the area to help support this growth.”

Colliers said in January 2019, expectations for growth were starting to emerge after a rough patch in global political, economic and financial concerns at the end of 2018.

By February, there was less global political tension and a dovish interest rate announcement from the US Federal Reserve due to lower global growth rate predictions.

This led to a renewal in the search for yield and investor interest was amplified. Locally, the rejection of a Capital Gains Tax in April refreshed confidence, and by May, purchaser enquiry was well and truly back on track.

Direct property sector results were strong with average rents up between 3 per cent and 5 per cent p.a. and average yields had firmed by between 15 bps and 25 bps.

“Alongside these positive investment metrics were the historically low vacancy rates and a relatively balanced supply pipeline,” Colliers said.

“When considering the year ahead, our June commercial and industrial investor confidence survey, which asks about expectations of market fundamentals over the next 12 months, showed national confidence lifted to a record-equalling 2.5 year high net positive result of 26 per cent.”

According to Colliers, it is also the first time in 5.5 years that all 13 regions surveyed had net positive scores. The company added that around 40 per cent of respondents indicated they would invest more over the next 12 months now that CGT was off the table.


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