Dennis McMahon McMahon Commercial mcmahoncommercial

As we commence 2011, we are all hoping for an improvement in last year. There is some cause for optimism as the dairy payout looks to be another strong one and we have the spin-off from the rugby world cup to look forward to.

Being an election year, we can safely assume that the incumbent party will not want to be throwing any nasty surprises our way.

More importantly, the world's demand for our primary produce remains strong and commodity prices are holding up well.

In the bigger picture, there are still real concerns over the USA and European economies and these issues are simply not going to be fixed in the short to medium term.

Our focus must be on our largest trading partner, Australia, and the Asian markets.

If we are able to enjoy a more stable economy in 2011 then this will flow through into the commercial property sector with businesses feeling more confident about their prospects.

This will translate into them thinking about their space requirements and, hopefully, some reduction in vacancy rates.

There are exceptions to this general possibility including the CBD office sectors in both Auckland and Wellington where vacancies are not expected to peak until 2013.

The office sector typically lags other sectors in terms of recovery and this time around is no different.

This results in static rental growth and in fact produces a reduction in net effective rentals as landlords compete for tenants for their vacant spaces.

Certainly, the further away from 2008-2009 we move, the better the market prospects will become.