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Christchurch commercial real estate company – Cantcomm has been taken over by Bayleys.

Founded by Harry Von Tongeren 15 years ago who now assumes the position of Commercial Sales Manager for the merged company.  The company will initially have a staff of 19, though this is expected to grow to 25 in the coming months.

The following items are the main topics covered Issue 57 of the Commercial Property New Zealand issued by Peter Hamling of Sigma Group Partnership.  The newsletter is supplied on a subscription only basis.  You can contact Peter on 09 436-1564.

Informed news and commentary for property professionals

• Are darker days lightening up?
• Auckland region awash with vacant Industrial space
• Vacant industrial properties bring pressure on rentals
• A view on the construction sector
• People in business
• Commercial property deals
• Industry events

Reprinted from Parallel Directions.  View the original post HERE!

One of the key impacts on the currently flooded commercial property market is the number of large corporate tenants moving to new buildings.

In Auckland, there’s a growing list of large banks, insurance companies, management consultants and engineering firms moving to bigger, better, brighter and greener premises.

Banking
The ANZ, ASB and Westpac banks have, or soon will, move to highly rated green-star buildings around Auckland’s up and coming waterfront precinct.

Insurance
Likewise, ING and IAG in the insurance industry have moved downtown, and on the North Shore we’ve seen Sovereign move from Takapuna’s retail strip to a state-of-the-art building in the Smales Farm technology office park.

Telecom
Telecom is moving from several buildings around central Auckland to one large complex overlooking Victoria Park.

Others heading towards the cooler environs of downtown include the large engineering practice SKM, which has relocated to the new office park built over the ex-rugby league grounds at Carlaw Park.

When the boom was booming loudest
I am often asked why these large organisations are moving when the global economy is still in turmoil. Simply, the decisions to move were made several years ago when the boom was booming loudest.

I was told last week by an executive of one of these organisations that if they had to make the same decision today, they wouldn’t be moving.

Anatomy of oversupply
These large corporations leave a large gap behind them when they move to new premises. But at the same time, as anchor tenants in new buildings, they don’t fill every floor of the new complex.

So we have vacancies in the new buildings they move to, and bigger vacancies in the buildings they vacate. The result is an inevitable oversupply.

Pitfalls
While tenants seeking new commercial space may appear to be spoilt for choice, there are some pitfalls for those taking up space in the buildings recently vacated by the large corporates.

For a start, prospective tenants will most often be smaller operations than the large banks, insurance companies and consultancies. As they require a smaller area than the bigger companies, they don’t hold quite so many bargaining chips.

Likewise, they don’t have the grunt of well-organised and practiced property departments behind them like the larger firms.

Tough landlords
It is critically important to have the support of professional advice because the professional landlords are tough negotiators used to dealing with tough opposition from the bigger firms.

Tough negotiators
It’s an area that we at Parallel Directions specialise in, so don’t hesitate to give us a call if you are considering taking up space in one of the vacated buildings.

Reprinted from Parallel Directions. See original post HERE!

I’m predicting the commercial tenancy market is about to become a bloody battlefield as times get really tough for investors and landlords managing commercial property portfolios.

There are five key factors that will cause this warring between landlords.

1. High Vacancy Rates. On 3 November I reported that vacancy rates were over 15 percent and could go higher in 2010. At that stage the real estate industry was still in denial and reporting a rosier picture. But latest research shows vacancy levels, particularly for office space, running at highs not seen since the early 1990s. There is now acceptance that vacancy rates could hit 16 to 18 percent.
2. Increasing Supply. Add the new office space coming on stream over the next two years to the high vacancy rate and you have one almighty glut. Auckland has 75,000 square metres due to come on stream in the next two years, and Wellington has 90,000 square metres!
3. Legislation. The third factor that has landlords squirming is Government’s indication this year’s budget will do away with depreciation provisions for tax on rental property, plus the possibility of a land tax.
4. Low Demand. Demand is still dropping. Many businesses continue to shrink, very few new start-ups are underway, and more and more businesses are looking at ways to cut costs by using less space and having people work remotely.
5. Falling Rentals. Commercial rentals are falling by 15 to 20 percent in Category-A buildings. This is an indicator that rents are on the way down in all categories.

If we delve into what’s happening, we can see that new space coming on stream is all largely committed to new tenancies. But vacancy levels will soar as these tenants vacate older premises to move into the new buildings.

I predict the commercial lease market will turn in on itself and we will see landlords poaching each others tenants as they vie to keep their buildings occupied.

While this buyers’ market might seem to benefit commercial tenants, these are very dangerous times and you must act cautiously and with expert advice.

Landlords can easily sugarcoat deals to make them appear more appealing to tenants. And commercial real estate agents working on commission will continue to con tenants into believing there is a set price and terms & conditions for rental space.

It takes shrewd advocacy on behalf of tenants to ensure good deals are negotiated and achieved as landlords and commercial real estate agencies go into “convince at all costs” mode in a desperate attempt to keep buildings fully occupied.

Nelson, Haven Realty Ltd, is the latest Real Estate firm to use FindSpace to display their Commercial Listings.

You can view all their listings HERE!