The industrial sector remains the most resilient asset class in the Auckland market. Despite COVID-19 disruption, record low vacancy has remained with pronounced demand and continued supply shortage.
The retail market has experienced challenging and uncertain conditions with the impact of COVID-19. Albeit shifting market sentiment, greater clarity on the extent of the COVID-19 impacts on the economy will likely only be seen in the coming months.
The COVID-19 pandemic declared by the World Health Organisation on 11 March 2020 continues to dominate headlines. As governments implement strategies to address health and economic implications, the valuation industry grapples with the concept of “Market Uncertainty”.
Whilst traditional commercial property assets face headwinds from the current economic circumstances the healthcare sector would appear less volatile as tenants’ businesses continue to operate, providing essential services, which reduces the potential for vacancy risk with expected ongoing financial support from the government.
Office rents in the Auckland CBD office market have been steadily increasing with prime rents a by-product of high replacement costs and limited new supply. Various market sources report rental growth rates of 2% to 5% per annum with an expectation of continued growth rates between 3% to 4% per annum for the next few years until new supply comes to market.