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What are we seeing in the commercial property market across the country?

Auckland

Commercial Land Shortage Pushes Prices to Record Highs

Writing at the end of April 2026, realestate.co.nz stated that a shortage of commercial land resulted in record high industrial and commercial land values. The average square metre was valued at $1,190 in the 12 months to March 2026. It’s the highest value record in over a decade and is an increase of over 600% in the last ten years. For the first time, the average asking price for industrial buildings in the city reached over $3.5 million.

According to realestate.co.nz CEO Sarah Wood, a structural shortage of development-ready land in Auckland is driving this record pricing. 

Auckland currently has 33 mega-projects underway or imminent led by 17 industrial developments, nine office buildings, and seven retail properties. The largest of these new builds has been identified as a 6.5ha warehouse building in Wiri, part of the $1 billion project being developed by the James Kirkpatrick Group.

Colliers’ September report notes that strong occupier demand, rental growth and limited supply have maintained Auckland prime industrial yields within a narrow 5.0% to 5.6% band, even amid higher interest rates. This suggests that investors are willing to accept the small income premium because they value the sector’s long-term growth prospects.

Landmark Deals

This year has seen the ‘largest single asset retail transaction in New Zealand history’ according to Colliers’ managing director, Richard Kirke.

The landmark deal saw the Glasson family acquire 49% of Westfield Albany for $308 million from GIC, with Scentre Group retaining 51%.

Another notable retail deal has been Glenfield Mall which sold to a syndicate of Australian investors, making their first investment in New Zealand for $146 million.

Flight to Quality

Premium office assets have performed exceptionally well in 2026, driven by a surge in offshore investment and a flight to quality with tenants prioritising premium, workplaces with robust sustainability profiles over secondary office stock.

Q2 saw a new investment partnership when Precinct announced that it would be selling a 50% interest in PwC to leading global investment firm, PAG, for $300 million, making it the largest transaction in H1 2026 (the market had a total transaction value of $2.02 billion) and signals confidence in these premium office assets.

The second biggest deal in H1 was Kiwi Property Group’s $205 million sale of ASB North Wharf to Precinct and GIC, a Singapore-based fund – again an office building and a joint venture between a New Zealand company and an overseas investor. This, according to CBRE, is the first time since H1 2023 that the office sector has held the top position for transaction volume.

Wellington

Little in the Construction Pipeline

Unlike Auckland, industrial supply is weaker in the capital and there are only a couple of industrial projects under construction, including a 6,158 sqm project for Crown Worldwide in Porirua and a project in Trentham.

JLL’s August findings suggest that industrial property demand in Wellington did show early signs of tightening in the first half of 2026 with overall vacancy declining by 10 bps to 4.1%. Across the capital’s key precincts, vacancy rates varied, for example Petone’s rate increased to 4.7%,  Ngauranga tightened to 9.7% and the industrial suburb Seaview held steady at 2.1%.
Feeling the Effects Redundancies

Wellington’s retail sector is still feeling the effect of reduced foot traffic following redundancies in the public sector. JLL’s data shows that in H1 2026, Wellington’s retail vacancy increased to 10.7% (up from 9.6 in H2 2025). Vacancy in the CBD tightened to 9.2% (down 60 bps) whereas suburban vacancy rose to 15.2%, a significant increase of 600 bps. The market is showing momentum along Lambton Quay, Manners Street and Cuba Street, however Willis Street is experiencing extended periods of vacancy and slower leasing activity.

The effects are also being felt in the office sector, vacancy increased to 18.4% in Q2 2026, this is, according to JLL, prompting tenants and investors to reassess their strategies. As with Auckland there is a flight to quality, with top-tier buildings holding firm on rent and older, secondary properties declining. 

Christchurch

Christchurch continues to build momentum as a commercial powerhouse, backed by Canterbury’s economic resilience, major infrastructure, and inner-city regeneration.

Sales and New Developments

The completion of the One NZ Stadium earlier this year alongside extensive residential growth in the eastern CBD has made the inner city a key focus for commercial investors.

Last year saw the sale of 181 High Street, better known as Little High and Mckenzie and Willis precinct, for around $60 million to investment fund manager Mainland Capital. Richard Peebles, who co-owned the property, said he would be funding his Downtown development, a large-scale, mixed-use project featuring retail, office, hospitality and residential spaces.

Another major CBD office investment that has just come to market is Kathmandu’s New Zealand headquarters which sits opposite One NZ Stadium and is said to generate an annual income of $1.95 million with fixed annual rent increases of 2.5%.

Colliers Christchurch reported that they had their best ever first quarter in 2026, “Properties that sat unsold for years found buyers, substantial industrial deals moved at pace, and investor appetite for the city and region is the hottest the team has ever seen.

Across the country, industrial and logistics assets continue to lead total market volume. Data from JLL highlights that over the 15 months to Q1 2026, industrial property accounted for more than half of all sales above $5 million.

Rising Valuations

This strength is reflected in Quotable Value NZ’s council revaluation, where business-rated properties surged 9.8% since August 2022, easily outpacing residential growth of 1.8%.

Regional Markets

For those investors looking outside the three major cities there are attractive opportunities to be found. Since higher initial returns compensate for smaller buyer pools, lower transaction values and potentially longer waiting and selling times, investors should look for assets with high initial returns that are anchored by solid and sustained occupier demand and long-term leases.

Notable key findings from CBRE’s Regional Figures Report (H1 2026) show:

• Prime Offices: Prime commercial office space in regional markets (e.g., Hamilton, Tauranga, Queenstown) experienced rental growth, whereas secondary assets remained flat due to oversupply, weaker demand, and tenant preference for modern, compliant buildings.

• Subdued Office Transactions: Investment yields for office properties remained soft with buyers and vendors often at a standoff. However, high-quality assets in regions like Manawatū, Taranaki, and Provincial Canterbury went against the grain with tighter yields and stronger activity.

• Queenstown Outperforms in Industrial Sector: While industrial rents across most regions remained static or showed slowing growth after a prior surge, Queenstown stood out as a major outlier with 0% vacancy driving up both rents and land values.

• Divergent Yields and Demand for Industrial: Industrial yields were mixed, with lower borrowing rates triggering yield compression in areas like Manawatū, strong demand for smaller-scale assets in Taranaki, and steady-to-improving investor interest in regions like Northland, Southland, and Tauranga.

• Suburban & Large-Format Retail Hold Up: Retail CBDs generally underperformed while suburban and large-format retail saw lower vacancies and steady activity. Rental growth and firm yields were confined to select prime retail strips (e.g., Queenstown’s Rees/Beach Streets, Tauranga’s Eat Street) with rents flat or falling in other areas such as Mount Maunganui.

What is the future looking like for New Zealand’s commercial property market?

It’s the million-dollar question, we all know predictions can never be more than that, but what we can see is that there is upward movement and momentum and it looks to continue with a period of stabilisation, real term construction growth and stable returns.

There are signs that retail will continue to attract attention, Nick Willis, executive director at JLL Australia & New Zealand commented to Commo, “New Zealand’s retail fundamentals are among the strongest we’re tracking globally…yet it remains one of the most under-supplied retail markets we track anywhere.”

JLL highlights that New Zealand features among the strongest retail fundamentals globally due to severe under-supply, carrying just 0.6 sqm of retail space per capita compared to 1.0 in Australia and 2.2 in the US.

With the upcoming elections, investors should take note of potential policy developments, including Labour’s proposed 28% Capital Gains Tax on commercial and residential investment property sales after 1st July 2027. This is speculative, and depends on an election outcome. However, it is worth evaluating strategic options.

If such a policy were to come into effect, then the team at The Finance Hub can help you decide the best path of action for your investments. This could involve:

• Selling prior to the 1st July 2027 deadline to avoid the tax.

• Adopting longer buy-and-hold strategies and focusing on rental income rather than capital growth.

• Diversifying your portfolio.
  

Falgun Patel, Manish Sachdeva and our experienced team of mortgage advisers work closely with both main and second tier lenders to help you build your commercial portfolios and carefully plan your future finances to achieve your goals.

To take the first steps to a portfolio that gives you strong returns, call The Finance Hub on 0800  346 482 or email finance@financehub.co.nz