At a time when the Reserve Bank has access to some figures which compels them to increase the official cash rate (OCR) the property market is hitting another sticky patch.

I attended a review of the Industrial Market several weeks ago in Auckland, presented by Alan McMahon, the director of research and consulting for Colliers International. In his address, Alan referred to the fact that industrial vacancy in Auckland is higher than it has been for almost 10 years. In Christchurch, Wellington and Auckland, he estimates there to be about 800,000m2 of vacant industrial space. He noted that the trend overall was for business to downsize and that businesses are still struggling.
Obviously this has a clear flow-on effect for property owners who, faced with the prospect of a long term empty building, are accepting deals which only two years ago would have been unthinkable. The decline in rentals invariably leads to declining capital values and the whole process becomes a self fulfilling cycle.
Locally, we are witnessing more vacant industrial space across both Tauranga and Mount Maunganui than we have seen in over a decade. On other fronts, the vacancy rate for office is on the increase in the main centres and retail sales are still soft.
So, with such a picture, how is it that we see interest rates starting to ease up again? The simplistic answer is the Reserve Bank's view on where inflation will be in six months time.
That, however, is of no help to the thousands of businesses who are simply trying to 'hang in there' and particularly through the normally difficult winter trading months.
They seem to be caught between the reality of the business world and the surreal world inhabited by the Reserve Bank and the economists. Not a good place to be.
Until next time, have a good week.