Colliers Portfolio Issue 5 2023

Licensed REAA 2008

Colliers Portfolio Issue 5

40 Hurstmere Road, Takapuna, North Shore, Auckland More on page 6

Accelerating success.

Oct / Nov

2023

Recent Deals SOLD

2

69 Corbett Road, Bell Block, New Plymouth Sold by Benet Carroll

Colliers Portfolio

SOLD

125 Coronation Avenue, New Plymouth Sold by Benet Carroll

SOLD

108 Third Avenue, Tauranga Sold by Simon Clark & Duncan Woodhouse

LEASED

7 Maui Street, Te Rapa, Hamilton Leased by Alan Pracy & Blair Hutcheson

SOLD

27 Katere Road, New Plymouth Sold by Benet Carroll

SOLD

31 Waihi Road, Tauranga Sold by Simon Clark & Rich Davidson

LEASED

614 Te Rapa Road, Hamilton Leased by Leroy Wolland & Alan Pracy

SOLD

6 Antares Place, Rosedale, Auckland Sold by Jimmy O’Brien & Nick Recordon

SOLD

1 Clemow Road, New Plymouth Sold by Benet Carroll

Contents

Did you know?

Colliers Portfolio Issue 5 04

06

Internationally acclaimed Tongariro Lodge

Trophy investment in central Takapuna

10

14

16

20

Key Listings

New Zealand Research Report | October 2023

Substantial Anchor Tenant in Hastings CBD

Take Colliers Portfolio on the go with you, by scanning the QR code below.

Welcome to the fifth and final edition of Colliers Portfolio for 2023.

It looks like we are in for a busy end to the year with a renewed optimism among vendors and purchasers following the recent election, which has coincided with some better weather.

This year has been very eventful and there have been some impressive results achieved across the country on a diverse range of properties, evidencing that buyers are still transacting and looking to capitalise on good stock when it is available.

With Christmas on the horizon, vendors are keen to see results before the holidays, which is having a positive impact in the market.

There are auction gala days set to take place in Tauranga and Auckland in November where a combined 16 properties will go under the hammer.

Our latest edition of Portfolio features a selection of top-tier assets, including a major retail laneway in central Takapuna on Auckland’s North Shore, the world-famous Tongariro Lodge, and collection of prominent offerings in Hawke’s Bay. There’s a broad level of opportunities available currently and now is the time to wrap up an acquisition before the end of the year.

Thank you for your continued interest in Colliers Portfolio, our national sales team looks forward to hearing from you.

Have a safe and enjoyable holiday season.

David Burley Auckland Director | Investment Sales

Colliers Portfolio

3

Fonterra Distrubtion Facility, Hawke's Bay

Colliers Portfolio is online.

4 Colliers Portfolio

Tongariro Lodge Lake Taupō, New Zealand For Sale by Deadline Private Treaty, closing Wednesday 6 December 2023 (unless sold prior)

5

Situated within 22 acres of private and beautifully landscaped grounds on the

Secluded landscaped grounds Superb accommodation for up to 110 guests via 2-5 bedroom villas and one bedroom chalets 41 years of trading and internationally acclaimed, the lodge has hosted a wealth of celebrities Further expansion capacity and development potential on lodge-owned land within the complex

Roger Seavill 021 950 187 colliers.co.nz/p-NZL67025974

Colliers Portfolio

“One of the World’s Great Fishing Lodges. internationally acclaimed Tongariro Lodge located on the southern shore of Lake Taupō.”

6 Colliers Portfolio

Boundary LInes Lines Indicative Only

Irreplaceable Central Takapuna Investment Popular “Eat Street” Laneway Development 40 Hurstmere Road, Takapuna, Auckland For Sale by Deadline Private Treaty closing 4pm Tue, 21 November 2023 (unless sold prior)

Returning $762,317 pa net

Fully tenanted professionally managed

2,176m² net lettable area

1,569m² Metropolitan Centre Zoned

250 metres from Takapuna beach

Future development potential

Returning $762,317 pa net from a diverse mix of tenants, this exceptional Takapuna CBD offering is fully leased and features many well-known brands such as Burger Burger, Caci Clinic, Bird on a Wire and many more. The property has been professionally managed for many years and has become the most popular hospitality precinct in Takapuna, one of Auckland’s most affluent, sought after suburbs.

Underpinned by 1,569 sqm of Metropolitan Centre Zoned land with a 24.5m height limit for future development, the offering will also benefit from significant investment in the Takapuna CBD, including the recently completed Hurstmere Road Streetscape upgrade. Positioned at the heart of Hurstmere Road’s commercial precinct and in close proximity to many planned sizeable residential & commercial developments, this iconic investment opportunity must be seriously considered.

Shoneet Chand 021 400 765

Matt Prentice 021 464 904

colliers.co.nz/p-nzl67025893

David Burley 021 478 225

News

Eat Street, located at 40 Hurstmere Road, has 1,767sq m of total net lettable area on a 1,569sq m site that is zoned Business – Metropolitan Centre Zone under the Auckland Unitary Plan.

The award-winning property has 13 separate income streams and returns $762,318 plus GST and operating expenses in total net annual rental income.

Many of the tenants are signed to long-term leases, indicating their commitment to this prominent site.

Burger Burger, who occupy the biggest tenancy at 282sq m, recently renewed their lease for another three years.

Sitting approximately 250m away from Takapuna Beach and Hurstmere Green, the property is located by the site that will be developed by Willis Bond, in conjunction with Eke Panuku Development Auckland, to create the Takapuna Central Apartments.

This development is set to reinvigorate central Takapuna and includes 110 premium apartments as part of a multistage $400 million project that will be spread over five sites and a total area of 5,560sq m.

Colliers Directors Shoneet Chand, Matt Prentice, and David Burley have been exclusively appointed to market the property for sale via deadline private treaty closing at 4pm on Tuesday 21 November, unless sold prior.

The tenancies of Eat Street range in size from 70sq m to 282sq m and include a complementary mixture of hospitality occupants and retailers, such as Bird on a Wire and Caci Clinic, among others.

Most of the tenancies extend into the next decade if all rights of renewal are taken up and a strong majority of the agreements include either CPI or market rent reviews to promote future rental growth.

Chand, Director of Investment Sales at Colliers, says the location of the property means there is a strong level of foot traffic.

“The masterplan developments happening around this location are part of the regeneration of Takapuna’s town centre that will make the area even more appealing to visitors and locals,” Chand says.

“Hurstmere Road was already an established shopping and commercial precinct in Takapuna that is pedestrian friendly. Further development will only see usage of the area grow. With the beach nearby and plenty of green spaces, this property is perfectly positioned to generate strong customer numbers.”

Prentice, Director of Sales and Leasing at Colliers, says the quality of the building construction adds to the visual appeal of the property.

“Eat Street has won multiple awards at the New Zealand Architecture Awards and has been built in the mould of a Melbourne laneway through the use of recycled bricks, raw concrete, and a new facade,” Prentice says.

“Sitting in a tightly held pocket of Takapuna, the property enjoys high levels of street exposure and visibility.”

Burley, Auckland Director of Investment Sales at Colliers, says the zoning of the property leaves the door open for future development opportunities to further intensify the site.

“The Business – Metropolitan Centre Zone applies to centres located in different subregional catchments of Auckland. These centres are second only to the city centre in overall scale and intensity and act as focal points for community interaction and commercial growth and development and contain hubs serving high frequency transport,” Burley says.

“The zone provides for a wide range of activities, including commercial, leisure, high-density residential, tourist, cultural, community, and civic services with a maximum building height of up to 24.5m allowing for further growth if a new owner wanted to explore such an opportunity.

“We encourage all interested parties to contact us immediately to ensure they don’t miss out on the opportunity to acquire one of Takapuna’s most eyecatching assets.”

Colliers Portfolio

A strategically located and architecturally designed retail laneway in Takapuna is available for purchase, providing discerning buyers with the opportunity to acquire a premier asset in a location that is undergoing extensive development.

7

Trophy investment in central Takapuna

8 Colliers Portfolio

Huge Add Val Opportunity!

1,651 Net lettable area plus 51 car parks 128 Khyber Pass Road, Grafton, Auckland For sale via Deadline Private Treaty, offers are to be submitted by 4pm on Wednesday 29th November (unless sold prior).

1,651m2 NLA plus 51 car parks

Central city location

Refurbishment and rental growth

Immediate access to motorway & public transport

Fantastic exposure

Freehold title

This versatile, standalone commercial building enjoys a prime location along the bustling Khyber Pass Road, renowned as one of Auckland’s most recognisable commercial districts. The property offers a rare prospect for both Owner-Occupiers and Investors, featuring a Net Lettable Area of approximately 1,651m2. A significant portion of this space, 1,280 sqm, is either currently available now or will become so in the short term, due to the nature of the existing tenancy profile. Located on the popular Khyber Pass Road, this property boasts very convenient transportation links and is in close proximity to Auckland Hospital, the University of Auckland campus, Newmarket’s popular shopping precinct (including Westfield), and is just minutes away from Auckland’s bustling CBD.

David Burley 021 478 225 colliers.co.nz/p-nzl67026019

Kris Ongley 021 657 687

9 Colliers Portfolio

Split Risk Childcare Investment Two Titles with Development Upside 923 Southampton Street and 205 Davis Street, Hastings For Sale by Negotiation

Total Land area 5,222m²

Two titles

$494,947 net pa + GST

Purpose built facilities

Residential zoning

Profile corner site

923 Southampton Street West comprises an immaculately presented purpose built childcare facility with a ground level café and first floor office returning $344,947 net pa + GST. The adjoining title at 205 Davis Street, Hastings was refurbished in 2017 and developed into a contemporary church featuring a 500 seat auditorium, internal gymnasium, foyer, kitchenette, office accommodation and storage rooms returning $150,000 net pa + GST. Generating an impressive net passing income of $494,947 pa + GST, this freehold property accommodates four thriving and diverse tenants with the ability to be sold together or individually and the opportunity to purchase 205 Davis Street on vacant possession. Trophy assets of this quality rarely come to market and must be seriously considered by all investors.

Danny Blair 021 826 496 colliers.co.nz/p-NZL67026116

10 Colliers Portfolio

Fonterra Distribution Facility Hawke's Bay Industrial Asset 52 Hanui Road, Hastings, Hawke's Bay For Sale by Deadline Private Treaty closing Wed 29 November 2023 at 4pm (unless sold prior)

Land area 1.2920 ha

Floor area 744.6m²

$231,857 net pa + GST

2% annual increases

NZX listed tenant

Strategic location

An A-Grade industrial investment opportunity that ticks all the boxes any astute investor.

Occupied by Fonterra Brands NZ Ltd, this coolstore distribution facility was purpose built for Fonterra.

The facility provides a mixture of freezer, chiller and ambient storage accommodation along with a small office area and canopy with raised loading dock at the front of the site with approximately 8,800m² of land remaining for further development.

The property is well located to all main transportation routes around New Zealand.

Danny Blair 021 826 496 colliers.co.nz/p-NZL67026101

Office, Accommodation, Hospitality or Mixed Use The Jewel of Napier’s Marine Parade 59 Marine Parade, Napier

11

Tender closing Wednesday 29 November 2023 at 3pm (not sold prior)

Floor area c.1143m²

67% NBS seismic rating

Holding income

Development opportunity

Colliers Portfolio

Prime location

Ash Hames +64 21 0242 8523 colliers.co.nz/p-NZL67026066

Cutting-Edge Entry Level Industrial Units 1-29, 62 Ormiston Road, East Tāmaki For sale by Negotiation

Greenmount Gem 11 Greenmount Drive, East Tāmaki For Sale by Deadline Private Treaty closing Wed 8 November 2023 at 4pm (unless sold prior)

Vacant possession Pricing from $720,000 $1,330,000

Available immediately

90m² - 170m² units available

3,336m² building

1.18 Ha land holding

Edward Washer 021 636 189

Greg Watson 021 083 13534

Greg Goldfinch 021 549 226

colliers.co.nz/p-nzl67025742

colliers.co.nz/p-NZL67025587

12 Colliers Portfolio

128 Khyber Pass Road, Grafton, Auckland This versatile, standalone commercial building enjoys a prime location along the bustling Khyber Pass Road, renowned as one of Auckland's most recognisable commercial districts.

Details on page 8

13 Colliers Portfolio

128 Khyber Pass Road

14 Colliers Portfolio

National Anchor Tenant Substantial 4,411m² Landholding in Hastings CBD 401-407 Holt Place, Hastings, Hawke's Bay For Sale by Deadline Private Treaty closing Wed 6 December 2023 at 4pm (unless sold prior)

Land area 4,411m²

Floor area 1,455m²

$314,600.89 net pa + GST

Five titles

National anchor tenant

Fringe CBD location

This property commands attention with its substantial site area of 4,411m², encompassing five titles and boasting premium frontage to St Aubyn Street East, providing excellent profile.

The property holds a prime position on one of the main city arterial routes in Hastings CBD, making it a highly sought-after trade retail destination. It benefits from a constant flow of vehicular traffic, ensuring maximum exposure for any business operating here. Currently returning $314,600 net rental pa + GST and fully leased to national tenant Hirepool and The Development Hub recruitment agency. This property offers an attractive proposition to investors.

Danny Blair 021 826 496 colliers.co.nz/p-NZL67026102

A highly visible property with multiple tenants on a prominent corner site in central Hastings offers buyers the opportunity to secure an attractive split-risk investment.

401-407 Holt Place, Hastings is home to a 350sq m building occupied by a recruitment agency, while anchor tenant Hirepool has a 1,105sq m facility and substantial yard space.

The property spans 4,411sq m and is spread across five freehold titles and is zoned Large Format Retail Zone under the Hastings District Plan.

With dual access from Holt Place there is convenience for staff, customers, and suppliers, while the property enjoys significant exposure to Saint Aubyn Street East, a main arterial route in Hastings.

Sitting over the road from a busy Kmart, there’s a host of high-profile national retailers in the surrounding area, including Bunnings, Noel Leeming, Briscoes, and Rebel Sport, among others.

The total net annual rental income from the property is $314,601 plus GST.

Hirepool have a national footprint and have been operating in New Zealand since 1955 with their large range of products and services.

They have a six-year lease that runs until April 2024 and there are further rights of renewal for four and three years, respectively, leading to a final expiry of April 2031.

Their lease provides $263,753 plus GST in net annual rental income and includes future rent reviews.

The 350sq m office building at 405 Holt Place was constructed in 1991 with further additions in 1996.

The building houses The Development Hub who work with women to help them develop a more positive future through employment, education, and training opportunities. Their success is driven through partnerships with the government, businesses, and community organisations.

The Development Hub’s current lease returns $50,848 plus GST in net annual rental income and expires in July 2024.

The Hastings CBD is only 650m away, while the Hawke’s Bay Expressway sits 5.1km away.

Blair says this property shapes as an attractive proposition to discerning investors who will covet the prime position of this site in a strategically located trade retail hub.

Colliers Hawke’s Bay Director Danny Blair has been exclusively appointed to market the property for sale via deadline private treaty closing at 4pm on Wednesday 6 December, unless sold prior.

“The underlying strength of the tenant covenant through Hirepool being the long-time occupant of the property will be highly appealing for buyers. Their lease also includes future rental growth,” Blair says.

Hirepool’s building, located at 407 Holt Place, was constructed in 2008 and provides a drive-thru covered canopy area with dual access. The building has 957sq m of space on the ground floor, while the first floor spans 160sq m, and the mezzanine area measures 57sq m.

“The impending lease end for the occupant of the smaller office building at the site provides potential future options for the new owner and it could be leased out or potentially repositioned.

The large service and reception area on the ground floor is open plan with kitchen facilities and access to the outdoor service area, wash bay, and workshop that offers roller door access. The first floor comprises a large open plan office, individual offices, and bathroom facilities.

“Investment opportunities of this calibre are seldom seen in Hastings, and I encourage all interested parties to contact me immediately for further information.”

Colliers Portfolio

Large-scale Hastings property in eye-catching location

15

News

For Lease - Levels 4 & 5

Pacific Rise Gem

179-193 Lambton Quay, Wellington

4E Pacific Rise, Mt Wellington, Auckland

For Lease

For sale by way of Auction, to be held 11am, Wed 22nd November (unless sold prior)

16 Feature atrium Quality fit-out & end of trip

2 large floors available

Building Area 820m2

Colliers Portfolio

(more or less)

Short-Term Holding Income

28 Carparks (9 covered)

Steve Maitland 021 726 200

Logan Roach 027 358 9383

Phil Humphrey 021 523 620

David Burley 021 478 225

colliers.co.nz/p-NZL67025803

colliers.co.nz/p-nzl67025988

Two Parnell Retail Investments 187 & 193 Parnell Rd, Parnell, Auckland For sale collectively or individually via Auction to be held 11am, Wed 22nd Nov (unless sold prior)

#187 $83,000 Net Income

Tony Allsop 021 959 154

Circa 120m2 Net Lettable Area with 4 Car Parks

#193 $89,500 Net Income

Circa 191m2 Net Lettable Area with 2 Car Parks

Kris Ongley 021 657 687

colliers.co.nz/p-nzl67026015

colliers.co.nz/p-nzl67026014

Rolleston Fields | Health & Well-being Asset

Building A, 60 Tennyson Street | Rolleston Fields, Selwyn

Combined net rental c.$680K

Land area 1,713 sqm

Strong tenant covenants

Brand new construction

Fixed annual growth

High growth locality

Courtney Doig 021 991 251 colliers.co.nz/p-NZL67025975

Rolleston Fields | Medium Format Retail Asset

Building B, 1 Rohutu Way | Rolleston Fields, Selwyn

For Sale by Deadline Private Treaty 4pm, Thu 30 November 2023 (unless sold prior)

Combined net rental c.$500K

Frontage to Tennyson St

Land area 2,133 sqm

Courtney Doig 021 991 251 colliers.co.nz/p-NZL67025980

Strong tenant covenants

Brand new construction

High growth locality

Colliers Portfolio

17

For Sale by Deadline Private Treaty 4pm, Thu 30 November 2023 (unless sold prior)

Top Tier Industrial Investment – Dual Tenancy Offered to the market for the first time in nearly 40 years!

18 Parkway Drive, Rosedale

For Sale by Deadline Private Treaty closing Tue 14 November 2023 at 4pm (unless sold prior) 18 Colliers Portfolio

1,626 sqm freehold title

Returning $203,360 pa net

Matt Prentice 021 464 904

2 established tenants

951sqm standalone building

18 onsite carparks

"A" grade location

Blank canvas suits custom fitout

Easy access to public transportation

Shoneet Chand 021 400 765

colliers.co.nz/p-NZL67025633

Rare Commercial Space For Lease Manukau's Leading Ground Floor Tenancy 652 - 654 Great South Road, Manukau For Lease

Expansive 327.19m² ground floor

Prime Great South Road frontage

High visibility location with great exposure

colliers.co.nz/p-NZL67023450

Ample parking options available

Ryan Gibb 021 826 421

Leroy Wolland 021 537 697

Research

Auckland CBD Office Colliers Essentials | 2H 2023

L 5.9%

Auckland CBD Office Vacancy Rate 20.0%

Prime

Secondary

L $6,761

12.0% 10.0% 8.0%

6.0% 4.0% 2.0%

Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23

0.0%

H $10,263

VACANCY RATES Prime

Secondary L 7.1%

H 8.1%

L $3,155

H $4,731

Secondary

8.0%

16.8%

SUPPLY Under Construction 84,200 SQM

Consented 22,277 SQM

Annual change Data based on June 2023. Face rents, yields and capital values are based on averages across all precincts. Financial figures exclude buildings in the development pipeline.

Auckland CBD Office Average Net Face Rents $600 Average Net Face Rents ($/SQM)

16.0% 14.0%

H $327

AVERAGE NET CAPITAL VALUES* ($/SQM) Secondary Prime

Overall

18.0%

H 6.8%

L $254

Prime

Secondary

$500

$400 $300 $200 $100 $0

Whilst all care has been taken to provide reasonably accurate information within this report, Colliers cannot guarantee the validity of all data and information utilised in preparing this research. Accordingly, Colliers New Zealand limited, do not make any representation of warranty, expressed or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto. © All content is Copyright Colliers New Zealand Limited 2023 (Licensed REAA 2008) and may not be reproduced without expressed permission.

Colliers Portfolio

AVERAGE YIELDS Prime

Pressure on rental rates to rise given low vacancy rates at the premium end of the sector and the rising costs of development and refurbishment. The average CBD net face prime rent ranges between $444 and $592 per sqm, up 2.9% from the year prior. We are likely to see a continuation of record rental levels being achieved as new, high-spec premises become available. Office suite leasing momentum continues to increase with gross rents achieving rates of $1,200 per sqm.

Average CBD prime and secondary yields have continued to soften over the last six months, with an approximate 40 basis point and 65 basis point movement, respectively. The latest round of yield softening is projected to conclude by year-end as the market gains more clarity on interest rates, and economic and political conditions stabilise post the October election.

H $592

Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23

There is currently 84,200 sqm of space under construction, which will represent 11% of the prime grade Auckland office stock upon completion. Strong tenant pre-commitment is evident, however it is likely that securing leases for lower-quality premises that require sizeable backfilling will take time. A number of planned or consented projects remain poised for construction pending suitable tenant pre-commitment rates. These projects include Symphony Centre, 5 Albert St, Britomart and the Downtown Carpark.

L $444

19

AVERAGE NET FACE RENTS ($/SQM) Secondary Prime

The June-23 vacancy survey results reveal the first decline in vacancy since Dec-19, indicating improved market sentiment. The overall vacancy rate tightened to 12.5%, down from 12.9% six months earlier. The prime vacancy rate fell to 8.0%, and the secondary vacancy rate fell to 16.8% compared to the Dec-22 survey of 8.3% and 17.1%, respectively. Stable employment conditions, record migration, and the availability of quality pre-fitted space are key contributors to this improvement.

Research

New Zealand Research Report | Oct 2023 20

Election policies signal an infrastructure boom

Land Transport Policy Announcements Labour and National Parties

Colliers Portfolio

Policy announcements in the lead up to the 2023 election have highlighted that, irrespective of which of the major parties leads the next government, spending on transport infrastructure will be significantly increased over the next decade. The roll out of numerous land transport projects promises long-term economic benefits and will also have a profound impact upon property.

The identification of a pipeline of infrastructure projects will be well received by the construction sector bringing a higher degree of certainty to future workflows and assisting in long-term planning.

Spending on infrastructure schemes will support the economy and create jobs during the delivery phase while modernising and increasing the resilience of New Zealand’s infrastructure over the longer-term.

Labour proposal - snapshot As campaigning got underway, the National Party announced its own package of projects, “Transport for the future”, which comprises an investment of $24.8 billion over 10 years on 13 roads of national significance, public transport projects in Auckland and the lower North Island, and a range of resilience upgrades. National has signalled that its long-term vision is to connect Whangārei, Auckland, Hamilton, and Tauranga with four-lane highways.

Where will benefit?

While the high population upper North Island centres will be the main beneficiaries of the infrastructure spending, proposals from both Labour and National will result in investment across the country. Both parties are committed to improvements to the motorway system north of Auckland, while the city itself will see significant investment in public transport. State Highway 2 in Hawke’s Bay will benefit from investment, and both parties support a second Mount Victoria tunnel in Wellington. Christchurch will see further investment in its motorway network, while both parties support a second Ashburton bridge.

Source: Labour Party, National Party, Press Releases, Colliers Research

There will likely be a number of major benefits for the property sector, including: 1.

Improved Accessibility and Connectivity: New roading and rail links will enhance accessibility and connectivity, facilitating the development of new 5. greenfield residential subdivisions to accommodate forecasted population growth. These new residential areas will stimulate demand for local retail services, as well as new entertainment and hospitality facilities.

2.

Increased Workload for Consultants: The design phase of infrastructure projects will lead to a rise in workload for consultants. This, in turn, will spur employment growth and an increased demand for office space across various centres due to the geographic spread of the projects.

3.

Enhanced Commuter Corridors: Improvements to commuter corridors will allow for more substantial intensification of residential, office, mixed-use, and retail space at or in proximity to transport hubs.

Boost to the Industrial Sector: The rollout of infrastructure projects will create significant opportunities for the industrial sector. Increased demand will be observed during and post-development, particularly from the construction sector as it scales up to meet project requirements.

Benefits for the Logistics Sector: In the longer term, the logistics sector will experience clear advantages as the national transport network receives a substantial proportion of funding. The expansion of motorways, expressways, new rail lines, and increased electrification will enable the growth of existing and new logistics hubs, inland ports and last-mile distribution facilities in an increasingly online retail economy.

6.

Cost Reduction in Travel: The reduced cost of travel on higher quality, modern highways will promote increased agglomeration of businesses and employment. This, in turn, will lead to improved productivity in economic sectors, especially in services, wholesale and trade, and manufacturing.

7.

Sustainable Development: Investments in public transport and road infrastructure with a focus on sustainability (e.g., public transit, cycling paths) contribute to environmentally friendly urban development.

New Zealand Key Economic Indicators October 2023 Jun-23 (vs. previous quarter)

Mar-23 (vs. previous quarter)

Q-o-Q Change

Jun-23 Vs Jun-22

Jun-22 Vs Jun-21

Y-o-Y Change

GDP

0.9%

0.0%

0.9%

1.8%

0.7%

Current Account (% of GPD)

-8.3%

-8.5%

NA

-8.3%

-8.0%

Jun-23

Mar-23

QoQ Change

Jun-23

CPI Inflation

1.1%

1.2%

-0.2%

Net Migration Gain (000's)

25

36

Unemployment Rate

3.6%

March Quarter 2024F

2025F

1.1%

1.5%

2.4%

2.2%

-0.2%

-8.1%

-7.0%

-5.7%

Jun-22

Y-o-Y Change

2024F

2025F

2026F

6.0%

7.3%

-1.3%

4.6%

1.9%

2.1%

-12

93

-18

110

92

77

68

3.4%

0.2%

3.6%

3.3%

0.3%

4.3%

5.1%

5.3%

Jul-23

Jun-23

M-o-M Change

Jul-22 (yr rate)

Y-o-Y Change

10 Year Average

2024F

2025F

2026F

59.3%

88.5%

35,380

344.2%

79,631

1.5%

6.0%

4.8%

3.5%

Aug-23

Jul-23

M-o-M Change

Aug-22 (yr rate)

Y-o-Y Change

10 Year Average

2024F

2025F

2026F

Floating Mortgage Rate

8.6%

8.6%

3 bps

6.7%

191 bps

5.8%

8.62%

8.49%

8.35%

3 Year Fixed Housing Rate

6.9%

6.9%

6 bps

6.1%

87 bps

5.3%

NA

NA

NA

Sep-23

Aug-23

M-o-M Change

Sep-22 (yr rate)

Y-o-Y Change

10 Year Average

2024F

2025F

2026F

5.50%

5.50%

0 bps

3.0%

250 bps

1.99%

4.00%

4.00%

4.00%

Tourist Numbers Growth

Official Cash Rate

Average Year To

2026F

March Quarter

March Quarter

March Quarter

March Quarter

Consumer Confidence

86.4

85

2%

85.4

1%

119

NA

NA

NA

90 Day Bank Bill Rate

5.74%

5.74%

9 bps

3.9%

189 bps

2.2%

5.75%

5.77%

5.77%

10 Year Government Bond

5.26%

4.91%

35 bps

4.2%

102 bps

2.9%

5.15%

5.60%

5.77%

NZD vs: US

0.60

0.60

0%

0.57

4%

0.73

0.66

0.65

0.65

UK

0.49

0.47

4%

0.51

-5%

0.51

0.45

0.42

0.42

Australia

0.93

0.92

%

0.88

5%

0.91

0.87

0.85

0.85

Source: NZIER, Colliers Research

21

4.

Colliers Portfolio

Property sector benefits

Research

Wellington Retail Colliers Essentials | 2H 2023 AVERAGE GROSS FACE RENTS ($/SQM) Regional Centre Prime CBD L $1,036

L $14,585

H $19,400

Regional Centre 7.2%

SUPPLY Prime CBD

Regional Centre

38,000 SQM

28,871 SQM

Annual change Data based on June 2023. Face rents, yields and capital values are based on averages across all precincts. Financial figures exclude buildings in the development pipeline.

Wellington Retail Gross Face Rents ($/sqm) Bulk Retail (RHS)

$350

$600

$300

$400

$250

Jun-23

$400

$800

Jun-22

$1,000

Jun-21

$450

Jun-20

$500

$1,200

Jun-19

Cuba Street

Courtenay Place

Manners Street

Willis Street

0%

Regional Centre (LHS)

$1,400

Jun-15

5%

Lambton Quay

L $7,835

Jun-23

10%

CBD Core

H 9.0%

5.8%

CBD Prime (LHS)

Overall

L 7.5%

VACANCY RATES Prime CBD

Gross Face Rent ($/m²)

Vacancy Rate

15%

Regional Centre

H $23,240

Jun-18

Jun-22

H $1,445

AVERAGE GROSS CAPITAL VALUES* ($/SQM) Prime CBD Regional Centre

Rental rates have come under pressure in the six months to June as discretionary spending becomes increasingly limited, interest rates continue to climb, and operating costs balloon. Average gross face rents declined to $1,238 per sqm at June-23, down from $1,253 per sqm in the prior two quarters.

Wellington Strip Retail Vacancy Rate By Precinct

L $705

H 7.3%

Jun-17

Colliers Portfolio

L 6.3%

Construction of new stock remains limited, however, the success of Precinct’s Willis Lane project illustrates that there is strong consumer appetite for stock additions that expand the retail offering. In the June survey, total stock declined to approximately 134,600 sqm as properties entered refurbishment. Currently undergoing refurbishment is the ex-David Jones space, where negotiations are underway for new entrants to the Wellington market.

Despite the many headwinds the market faces, investor confidence remains solid. Average CBD prime yields softened by only 11 basis points from Dec-22 to Jun-23, compared to a 25 basis point movement in Auckland’s CBD prime sector. Bulk retail centres are performing well, with yields staying flat since June-22. Overall, transaction activity is anticipated to increase in 2024 following the election, with yields for the subsectors expected to find their respective baselines.

H $1,440

AVERAGE YIELDS Prime CBD

Jun-16

22

Overall Wellington retail vacancy rose slightly in the June- 23 survey to 5.6%, up from 5.0% six months earlier. This figure translates to approximately 500 sqm of vacant space becoming available, reflecting underlying resilience in the Capital. Vacancy rates declined in Willis Lane and Courtenay Place, while they saw marginal increases in other locations. Looking ahead, vacancy is likely to remain low due to strong projected net migration and tourism growth, as well as the removal of stock for refurbishment or seismic strengthening.

Whilst all care has been taken to provide reasonably accurate information within this report, Colliers cannot guarantee the validity of all data and information utilisedin preparing this research. Accordingly, Colliers New Zealand limited, do not make any representation of warranty, expressed or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto. © All content is Copyright ColliersNew Zealand Limited 2023 (Licensed REAA 2008) and may not be reproduced without expressed permission.

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Oct / Nov 2023

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