Hamilton property experts upbeat on CBD development
Work on projects like the PwC Centre and Centre Place may be over but Hamilton's commercial property experts say development in the central city is only just beginning.
After a busy year of activity in the central city, Lodge Real Estate commercial property managing director Nigel Corkill is tipping that improved confidence in the sector will see the trend continue during the next year.
He said prices would continue to firm as investors looked for new buildings with good tenants and leases but found fewer available.
Older buildings, particularly ones with earthquake-rating issues, would become more and more difficult to sell but that would see the market prompt a further shift towards quality, with buildings being demolished rather than patched up.
"I think people are more confident and therefore we're seeing people knocking over buildings in the central city and developing them," Corkill said.
"There's a lot more activity in the sector"
NAI Harcourts commercial director Mike Neale said the city had traditionally had a shortage of active quality commercial developers but new players - such as Stark Property, Watkins Property, BC Harvey Industries and Hatwell Properties - were coming into the market and undertaking quality refurbishments.
Last year the NAI Harcourt team had its best year since the peak of 2007 and Neale expects 2014 to continue along similar lines.
"This includes both redevelopment and new builds, new tenants to the market and owner-occupiers taking advantage of the current low interest rates," he said.
"When you drive past a vacant building and you now see investment and redevelopment that will be but one of a multitude of positive stories."
"[We] have definitely come off the bottom of the cycle and business confidence in general remains encouraging."
Colliers' Hamilton director Mark Brunton said the gradual improvement over the last 12 months would continue to filter through into the new year.
This would occur from investors' yields, which would go down as people were prepared to pay more and be more confident about the future, through to tenancy and leasing, with improvements in rents and further design builds.
Brunton expected to see work on a third large-scale office build to complement the PwC Centre and Project Grantham.
Though multiple office projects were waiting for an anchor tenant to allow the work to proceed, Brunton said only one was likely to go ahead, because the small pool of quality tenants in the city was unlikely to justify more than one new premium-office build.
The challenge for the industry now was finding the building stock to sell to investors, Brunton said.
"Because of confidence, tenants are signing up to design builds. That will help to some degree but we've also got to work through all the industrial [properties]."