Market musings

Commercial real estate is entering a period of renewed activity, with increasingly optimistic indicators pointing toward growth.

Market dynamics across the commercial real estate sector are shifting, with fluctuating demand and mixed sentiment creating a more complex landscape. Even so, early indicators point to strengthening confidence as investors and occupiers position themselves for emerging growth opportunities.

Office markets across Australia and other APAC economies are experiencing a resurgence and early indicators suggest strengthening demand in New Zealand as well. Kiwi Property Group’s planned sale of Auckland’s ASB waterfront headquarters to an investment entity associated with Precinct underscores the trend of real estate investment trusts repositioning capital. With confidence growing around an improving economic outlook, further significant office transactions are expected in the coming year.

Overseas visitor numbers rose six percent in the year to December 2025, pushing annual arrivals above 3.5 million for the first time since before the pandemic. This renewed momentum is energising buyer confidence across the hotels, tourism and leisure (HTL) sector.

Activity in the HTL market continues to build, supported in part by recent changes to visa settings that are flowing through to business sale activity. Elevated enquiry levels are now translating into completed deals for going concern businesses, signalling renewed confidence in the market.

New Zealand’s net migration gain in 2025 was the lowest for any calendar year since 2013, excluding the pandemic affected 2021 and this is not going unnoticed in the wider commercial property market. Reduced population growth has softened demand in the industrial sector, contributing to rising vacancy levels, stronger leasing incentives and slowing growth. In contrast, other APAC markets are not experiencing the same slowdown. With larger population bases to draw on, these economies continue to attract tenants and maintain more active industrial markets.

Clarity on a more proportionate and risk based regulatory framework for earthquake prone buildings is expected mid year, as the select committee reviews the Building (Earthquake prone Buildings) Amendment Bill. This progress ahead of the November election could provide owners and occupiers with a more certain compliance pathway, helping them plan upgrades, transactions and investment decisions with greater confidence.

Deals on the rise

Bayleys data shows commercial and industrial deal volumes increased 11 percent between September 2025 and the end of February 2026. February 2026 activity was also significantly higher, rising approximately 65 percent compared with the same month last year. This uplift in transactions reflects growing market momentum.

Sales values have improved as well, up nearly 19 percent year to date, with several major transactions over $20 million contributing to the overall increase.

Bayleys is strengthening its rural and commercial partnership capabilities to support landowners looking to diversify their investments beyond the farm. This integrated national approach is creating clearer pathways for clients exploring commercial property opportunities.

In this environment, buyer activity is evolving. Heartland New Zealand has become one of the most active groups in the market, reflecting rising rural confidence and improved liquidity across the agricultural sector. These conditions are encouraging more landowners to consider the long term, stable returns offered by commercial property given the lower debt servicing environment and competitive pricing for investment grade assets.

There’s a lot to digest in the current market, and the Bayleys team is on hand to help make sense of it all. Reach out anytime as collaboration leads to better outcomes, and we’re ready when you are.