Dennis McMahon McMahon Commercial mcmahoncommercial

Since late last year we have seen a significant upswing in leasing activity across the commercial portfolio we manage.

Over the last five weeks in particular we have managed to achieve five new Agreements to Lease, all for good tenures and acceptable square metre rates. The incentives required have ranged from 1 – 2 months of net rental per contracted year which has definitely reduced from 2012 and subsequent years where landlords in some cases had to provide up to 12 months incentive.

In an article by the New Zealand Herald recently it was noted in a survey undertaken by Colliers that the market is moving in favour of the landlord in Auckland.

Fifty three per cent of landlords within the Auckland CBD expected rents to increase this year. There is every reason to believe the flow on effect of a supply constrained Auckland and energetic market sentiment will move out to the regions in a matter of time.

Whilst sentiment is improving the current leasing environment remains competitive. With a good deal of vacant commercial space (particularly B/C/D grade) and the overlay of earthquake compliance requirements (driven by both the government and the market), securing a good long term tenant in my view still requires strategic proactivity in marketing your vacant space.

The discerning landlord of today is required to be more sophisticated than ever before to achieve sustainably leased buildings.

Our observation of presenting fully refurbished vacant space (product) to the market to achieve a successful outcome was endorsed by a very recent success on the third level of one of our office properties in Newmarket.

The prospective professional type tenant was shown the refurbished, open plan space on the 31^st of January.

It was clear the principal could clearly visualise their staff occupying the space. With a quick turnaround in layout planning and project costing, we had achieved a full hard & soft fit out within 30 days and in time for the tenant to move in on the 28^th February on a new six year lease. There is no doubt this outcome was driven by the presentation of fully refurbished space which was open plan and flexible.

Tenants today are certainly motivated into making a decision when presented with a property that is well presented. In the short term, any landlord prepared to invest strategic capital in their buildings to ensure a quality product offering to the market, will continue to steal a march on competing vacant space within the market.

Scott McKenzie
CEO Property Managers Ltd.