Auckland Figures Q3 2024

Key Points:

• Leasing brokers report improved occupier confidence in the wake of falling interest rates. However, current demand remains weak with net absorption generally negative in 2024 across the markets.
• The adverse rental impact (for net effective rents) of weaker occupier markets has been most evident and widespread for industrial property in Q3.
• The shopping centre and office markets also experienced higher incentives, but these increases were more concentrated in selected assets or submarkets (such as sub regional shopping centres and some suburban office precincts).
• The RBNZ’s OCR cuts, compounded with sizeable declines in medium-term interest rates, have refocused the market to a more transactional mindset.  While this change will not immediately firm property yields or produce more sales, the market has reached the peak of the yield cycle.
• Q3 showed a general pattern of stable market yields across all sectors.  Retail centres have had the most yield softening this year, by an average of 16 bps. However, in Q3, only a few regional shopping centres saw yield softening, with changes of no more than five basis points.