There was a hard landing for all real estate sectors last year, however an encouraging uptick in Auckland commercial and industrial transactions in the final quarter signalled that it could be quite a different market across leasing and sales for those sectors in 6-12 months’, according to Bayleys.

Its Auckland general manager commercial and industrial, Scott Campbell says ahead of the summer break, transaction numbers were up across all business lines.

“Our ‘roll up your sleeves’ approach and client care philosophy forged a solid grounding for these transactions to occur and that momentum has carried through to this year.

“We’re dealing with a different beast in 2025 as economic fundamentals improve. Investors are exploring options, asset owners are making decisions, and businesses are committing to new ways of working with revised operational models.”

In the industrial sector, Campbell says leasing activity is picking up after a fairly sluggish 2024 when the logistics segment of the market took a noticeable hit from reduced consumer spending.

“Regardless of industry type, a flight to quality is still evident for industrial occupiers as the preference for modern amenity-rich buildings plays out – particularly for those larger corporate tenants that are headquartered offshore with demanding stakeholder-led ESG thresholds to be met.

“This drive for A-grade premises is keeping rents firm at this end of the market, and with limited new-build stock in the pipeline, prime rents could face some upwards pressure.”

Campbell says speculative industrial builds are almost non-existent as developers faced with construction cost pressure, high financing costs and economic uncertainty have not been prepared to carry the risk of an empty building.

“That said, enquiry on bare land sites has increased lately which signals that the development market is feeling more confident and we’ll be watching with interest to see what transpires in key Auckland precincts where there is land available.”

In the office sector, the “back to the office” movement is swelling and this is feeding demand for well-located, modern, high-amenity premises.

“In the new world of work, occupiers are wanting more flexible workspace and lifestyle zones that cater to staff well-being to attract and retain the best people,” says Campbell.

“This month, Beca will complete its move into the new purpose-built Wynyard Quayside tower built by Precinct Properties, future-proofing its Auckland office footprint. Looking ahead, finding A-grade stock with scale will be a challenge for many larger occupiers until the pipeline of new development catches up.”

As the City Rail Link (CRL) project draws closer to completion, some office assets around train stations are being refurbished and repositioned to leverage the connectivity gains that the CRL will bring and retail/hospitality operators will also be looking to capture increased foot traffic.

Leasing of retail stock on the high streets and main strips around Auckland, especially Newmarket and Queen Street in the CBD, has been relatively sticky, but Campbell says while vacancy rates appear to be improving it’s important to remember that churn in the sector is not new.

“Retailers come and go regardless of economic cycles, but the last year has been particularly tough with business models stress-tested as the cost of living bit, and consumer spending patterns changes. As a result, retail operators are getting smarter about how they trade and what they offer.

“Hospitality has been a casualty as people tightened their wallets, but events like the recent SailGp proves that when there’s a reason for people to come out they will – and they will spend. as cafes and restaurants around the city could attest.

“Retail rents have held relatively firm, and lease incentives are tapering off. It is clear that security on leases is important and occupiers need to build this into their business plans to strengthen their position with landlords.”

Bayleys’ business sales’ arm reports that activity is up, with a notable increase in mergers and acquisitions.

“As succession plans run their course and retirement necessitates a sale, intergenerational family businesses are finding new owners,” says Campbell.

“Businesses in the manufacturing sector have been selling well, and potential changes to foreign investment thresholds, as signalled by the government, will play into the wider business sales’ arena so we expect to see greater transaction levels as the year progresses.”

Campbell notes that there’s been an upswing in interest from global institutional and private high net wealth capital looking to invest in Auckland property, with its capital markets’ team fielding enquiry from superannuation funds, family offices and other fund managers.

“New Zealand has broad appeal for these entities and there is plenty of opportunity for them in Auckland.”