justin kean, director research & consulting, jll
TRANSCRIPT
Market Snapshot 2016:Drivers of the Commercial, Retail and Industrial sectors in greater Christchurch
Justin KeanSeismics and the CityMarch 2015
March 2016 2
GrowthSlowing
RentsFalling
RentsRising
DeclineSlowing
The JLL Property Clock ™
Christchurch CBD Office Market
Christchurch Industrial Market
Christchurch Retail Market
It takes time
March 2016 3
Office – Will the suburbs deliver? And what then of the suburbs?
• Massive increase in supply has cut the prime office rental to $340-$400psm
• Prime yields 6.0% to 7.5% with virtually no investment grade stock for sale - Developers are building to keep
• Core symptomatic of chunky CBD vacancy 18.9%, supply. Will increase further – 25% territory.
• 215,000 square metres of CBD office stock with over 80,000 to be added in 2016.
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Dec 14 Jun 15 Dec 15
CBD Suburban
Christchurch Office Vacancy
March 2016 4
100,000 m² of office space in the pipeline
H1 2015 H2 2015 H1 2016 H2 2016 H1 20170
10,000
20,000
30,000
40,000
50,000
60,000
Christchurch CBD Office Completions m²
March 2016 5
Retail – Critical mass is critical
• Majority of CBD Retail Precinct open by Christmas – 20,000 m² retail
• Diversification from a ‘handful of coffee shops’ emerging bar & restaurant scene with some more high end retailing
• International retailers are coming to NZ and Christchurch is on their hit list
• Hot-spots Cashel Street, Hereford Street, Oxford Terrace and Colombo Street.
• Biggest Issue – car parking
March 2016 6
Industrial – Shedding historic stock
• Prime warehouse rents stable at $100 to $130 psm
• Citywide vacancy at 5.2%. 100 bps increase attributed to older stock out East.
• Syndication becoming more prevalent. Countdown DC sold to a syndicate for $39.5M at 7.2%- Very attractive relative to the rest of NZ
• Development centres around West Christchurch and Rolleston best land and transport linkages.
Location Vacancy %
Middleton/Wigram 2.8%
Hornby/Sockburn 3.4%
South City/Sydenham 8.4%
Bromley/Woolston 9.2%
Total 5.2%
Property Type Rental Range
($/m²)
Forecast Rental Growth Next 12
Months (%) Yield Range
(%)
Prime 100 - 130 0% to 2.5% 6.25 – 7.5
Secondary 70 - 100 0% to 2.5% 7.5 – 9.0
Christchurch Industrial Vacancy
Key Industrial Indicators
March 2016 7
CBD Residential – Apartment MarketReaching a maturity of sorts• Aiming for 20,000 CBD occupiers – is this
realistic?- Auckland has 28,000 people growing to
48,000 by 2033- Wellington has 24,500 growing to 30,000
• Links to success of CBD retail
• Western areas preferable (Park Terrace) more affordable areas east of core.
• Longevity of the market is likely to be determined in the next market cycle, not this one.
March 2016 8
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
Christchurch Total Transactional Volume (Sales over $5M)
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Thank you
Justin KeanDirect Research and ConsultingAuckland+64 9 363 [email protected]