No foreign knights to the rescue
Don't expect big overseas institutional buyers to come to the rescue of the New Zealand commercial property market in a hurry, Jones Lang LaSalle NZ managing director Stephen Saul said this week.
Addressing the consultancy's market outlook breakfast in Auckland, Mr Saul said: "Right now they have better opportunities elsewhere. Australia is having trouble bringing in overseas capital - those institutions are seeing distressed opportunities that can bring them 25 per cent internal rates of return in Europe, Asia and the US.
"The New Zealand currency has to correct and we have to get our asset values right."
Senior executives generally accepted there were not too many bright spots in an overall property market downturn. Rather than try to create a rosy picture, they presented ideas on how landlords and tenants could improve their lot.
Jones Lang LaSalle's national director of office leasing, John Church, said if landlords tried to charge large sums for fitouts this year they would kill deals. "Last year a $1 million fitout was no concern at all.
"A lot of tenancy consolidation strategies are being put in place now. Short-term leases are inevitable - we're seeing a lot more inquiry for five-year leases, he said.
"Green star is the key for old stock survival. Especially for multinational tenants, you can't ignore green star."