A distinct two-tiered market has emerged across the commercial property sector, according to Colliers Auckland Director of Investment Sales Tim Bull. There remains significant capital seeking a home, particularly from private wealth and family trusts, with a clear preference for secure, passive investments. Encouragingly, vendor and purchaser expectations are more closely aligned than they have been for some time.
While broader global conditions continue to shape sentiment, it feels as though the market has reached a level of relative stability after an extended period at the bottom of the cycle, says Bull.
“Rather than anticipating dramatic shifts, we are observing a more balanced environment where pricing is better understood on both sides, providing a stronger foundation for transactions to occur.
If global economic conditions stabilise more quickly, New Zealand is well placed for a period of sustained recovery.
“Buyers are prioritising long-term leases, strong tenants, prime locations and robust property fundamentals, and they are prepared to accept very sharp yields to secure these attributes. When one of these elements is missing, pricing adjusts quickly, with secondary assets reflecting higher perceived risk and the potential for vacancy or capital expenditure.”
The current oil price shock and situation in the Middle East continue to pose a risk to New Zealand’s household budgets, consumer spending, and ultimately demand for retail spaces, according to Colliers.
Inflation will be pushed higher, economic growth will be positive but slower, and unemployment is likely to increase over 2026.
In the retail sector, Wellington remains soft, with elevated CBD vacancy despite some precinct-level improvement. Auckland retail continues to show clear recovery, led by the CBD and regional centres.
Demand drivers differ. Wellington is constrained by weak spending and public sector cuts while Auckland demand is strengthening on improved confidence and rising CBD foot traffic.
Rents and yields are broadly stable and investor sentiment remains cautious but was gradually improving heading into 2026. The development pipeline is fairly muted while vacant stock is being absorbed by the market.
Leasing demand remains strongest for prime, well-located industrial assets in the established South Auckland market. Development activity has moderated, with a measured pipeline of new prime stock reducing the risk of oversupply.
New industrial properties are tending to favour higher stud height builds and the adoption of advanced logistics and warehousing technology is influencing future development pipelines.
Average net rents and yields are stable. Improving transaction volumes signal robust investor confidence, particularly for prime assets with secure income profiles.
Despite the situation in the Middle-East, investors in Auckland’s industrial properties are still positive about the market for the year ahead encouraged by IMF predictions that New Zealand’s economy will outperform other developed countries.
