The smart money is one step ahead of the economic pendulum, seeing opportunity in commercial and industrial property while others remain in a holding pattern.

With a raft of macro events and geopolitical tensions still in play, it would be easy to get sucked into the vortex and call time on any new investment until the dust settles. But what is the opportunity cost of that – and once the dust has actually settled, what possibilities will you have missed?

In the words of the late Sir Bob Jones and with a nod to his sage advice: “when everyone else is buying I go fishing, and when the market sours, I’m buying”.

We’ve said it before – savvy investors get ahead of the curve. While overall sales activity has stalled somewhat in Auckland with wide bid-ask spreads and lagging book values being noted, some big deals have been done recently. Higher value properties have attracted more attention lately than in the last couple of years proving there’s plenty of capital out there, but there’s also a high degree of selectivity being exercised.

Some sales have been conducted off-market, leveraging Bayleys’ established and integrated networks and industry contacts, but the majority have come together off the back of strong vendor motivation and marketing investment to encourage competition and deliver stakeholder transparency.

Economic markers are lining up for property investors across the price and sector spectrum. The all-in cost of commercial lending has trended downwards from 7.7 percent 15 months ago to circa-5.5 percent now. While the end-game OCR could settle at 2.5 percent, it’s unlikely that swap rates will come down much more and most banks will have factored future cuts into their pricing.

The delta between yields and interest rates is turning the investment focus away from money in the bank, where after-tax real returns are diving towards negative territory. Property looks good through an investor lens and if you can see your way through the next three months or so before interest rates bottom out, there’s good opportunity to be found in commercial and industrial real estate.

March year-on-year leasing deal numbers across our commercial and industrial business are up 25 percent, and sales volumes up 13 percent.

Listing inventory is elevated, with a record number of leasing opportunities on the books. Industrial and office sector vacancy is heightened as logistics-driven operators shuffle capacity needs and office-led businesses continue to right-size and quality-check their real estate footprints. Asset quality is under the spotlight, with a chasm widening between prime and secondary assets.

Retail property sales have stabilised with capital seeing value in the sector – particularly for supermarket-anchored assets, and suburban shopping centres with diversified tenant mixes and favourable underlying land credentials.

On the retail leasing side, vacancy rates are blended across town centre, large format and trade retail properties with CBDs and high streets seeing the highest number of vacant store fronts.

Following a period of subdued interest, we’re seeing momentum in the business sales sector. This uptick in interest for going-concern businesses is due to returning ex-pats looking for opportunities, people effectively “buying themselves” a job whether as a result of redundancy or change of direction, and established operators making strategic business acquisitions to build scale or hedge against inflation. Good businesses are holding their value and with international visitor numbers rebounding, the hotels, tourism and leisure market is being revitalised.

As winter kicks in, get in touch with Bayleys for a frank and informed take on the current market because whether you’re looking to sell, buy, lease or get some advice, we can point you in the right direction.