Landlord war tipped as vacancies rise

A landlord battle could be looming, with high levels of vacant commercial property around Hamilton and a number of commercial projects due to be completed over the course of the year, a commercial property leasing agent says.

Auckland-based leasing agents Parallel Directors chief executive Peter Scott believes commercial projects soon to be completed around Waikato will leave older properties untenanted in a market where rents are already falling.

"Vacancy levels will soar," Mr Scott said. "We are going to see landlords grabbing each others' tenants as they vie to have their buildings occupied and maintain the value in their investment."

While tenants might be able to negotiate lower rents, Mr Scott warned them to read the fine print of their leases, as landlords "will become more cut-throat about the conditions in their contracts".

He said nationally office space vacancies were at about 16 to 18 per cent. Coupled with the Government's talk about scrapping depreciation provisions for tax on rental property, that was pushing commercial rents down.

Hamilton's CB Richard Ellis commercial sales and leasing manager Mike Neale said landlords were making leasing decisions based on their circumstances.

Long-term investors could reduce rents but those looking to sell realised rental reductions would be detrimental to property value.

"There is, however, no question that we are seeing an increase in vacancy levels at this time."

Some vendors did not believe the market would improve in the foreseeable future and were reducing their portfolios, he said.

However, while many were selling for less than they expected, recent commercial auctions had been the best in two years, he said.

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