Commercial real estate has legs

Improving economic fundamentals and a hungry buyer pool point to a full-on year for commercial and industrial real estate.

As the country enters a new economic cycle with interest rate relief, improving business confidence, a rise in building consents, and an export-conducive New Zealand dollar signalling better times ahead, commercial real estate is a shining light.

While every sector and every business line across Bayleys’ full-service network saw record levels of activity from September-December last year, commercial was a standout. Four record months in a row after four years of grind was hard fought and speaks to the aptitude of our interconnected and proactive team around the country.

Clients have seen Bayleys’ capability momentum, recognised the market traction that we have, and backed our nous to cut through extraneous noise to get deals done.

As 2025 wound down, we logged market metrics not seen since the 2021 heyday – which we all know was an artificial reality distorted by pandemic pandemonium. By Q4 last year, listing and transaction volumes were pumped, and values-wise, risk had been priced in with vendors and buyers finding common ground to allow deals to be inked.

Market enthusiasm has spilled into 2026 in the commercial and industrial arena and while the year has only just got underway, our brokers are reporting elevated enquiry levels.

Importantly, for the first time in around 30 years, every capital source and buyer group is firing and that’s not an understatement, with plenty of dry powder across the buyer spectrum. Cash rolling off term deposit is hunting for positive real returns, rural capital is now one of the most inquisitive and liquid buyer classes in the country, superannuation funds are back in the game, the family office market and syndicators are proactively looking for investment opportunities, and global capital is mobilised.

Optimism fuels growth

The mood of the country is improving. The latest Westpac McDermott Miller Consumer Confidence Index showed an uptick in household optimism, with Auckland now the strongest region for consumer confidence.

NZIER’s business opinion survey for the December quarter showed an upswing in sentiment and improving employment fundamentals, with the manufacturing, export and construction sectors rallying, and an encouraging rebound in investment intentions. Business confidence, it says, is at its highest level since March 2014.

MBIE’s National Construction Pipeline Report showed that non-residential building intentions remain high and are forecast to rise steadily through to 2030.

The current lower interest rate environment will hopefully improve the debt position of some landlords, while also enticing investors to commit. Investor tolerance for risk has been tested in recent years, with the big players in the listed sector actively pursuing new channels of capital to improve balance sheets and position themselves strongly for growth.

In delivering his recent State of the Nation speech to business leaders, Prime Minister Christopher Luxon stressed the need to take a measured yet targeted approach rather than repeating the sugar-rush economics of the past, and while election years can be disruptive to real estate activity, we expect the commercial and industrial sector to forge ahead.

In this Year of the Fire Horse under the Chinese zodiac, Bayleys will draw on the intense energy and bold action that the sign symbolises.