Investors Shift Focus to New Zealand’s Commercial Real Estate Market

A notable resurgence is occurring in New Zealand’s commercial real estate market, with investors increasingly returning as confidence and growth prospects strengthen. According to the New Zealand Capital Markets Report 2025 by JLL, the first half of the year experienced sustained momentum in commercial and industrial property sales, building on a recovery that began in 2024. The report highlights that 2023 represented the market’s lowest point, and a period of recovery is now in progress.

The outlook for New Zealand’s commercial and industrial property market remains positive as the country moves through 2025 and into 2026. The report states that a combination of favorable economic fundamentals positions the market for continued growth. Todd Lauchlan, Managing Director of JLL New Zealand, noted that improved investor sentiment is largely due to easing inflation and lower interest rates, along with supportive government policies.

“New Zealand looks like a good place to invest,” Lauchlan remarked. “People like to invest at the beginning of a new cycle, and we’re definitely at or near the bottom, starting to recover. So you see a lot of capital looking for opportunities.”

Although commercial property transaction levels remain below the peak of $7.08 billion reached in 2021, Lauchlan indicated that ongoing recovery signals a healthy and sustainable foundation for future growth in both value and volume.

Market Dynamics and Opportunities

Currently, Auckland’s industrial vacancy rate stands at 2.8%, which is lower than comparable cities such as Sydney (4.4%), Melbourne (5.3%), and Brisbane (4.7%). This tight market offers competitive yields, with Auckland averaging 5.25%, compared to 5.44% in Sydney and 5.81% in Melbourne. Factors like Auckland’s geography and limited land availability, along with infrastructure developments such as the City Rail Link (CRL) and upgraded bus networks, have further bolstered investor confidence.

“Replacement costs for new buildings are much higher than existing assets, which gives investors confidence that their value will continue to rise,” Lauchlan explained. Demand for prime office spaces remains strong, while the secondary property market, which includes older buildings, is expected to see moderate rental growth as the economy stabilizes.

The retail sector is also displaying early signs of recovery, with shopping centres and large-format retail demonstrating resilience amidst changing consumer habits.

Strategic Alternative for Investors

The JLL report concludes that New Zealand now presents a strategic alternative to Australia for seasoned investors. The country benefits from a stable pricing environment and a structural undersupply, particularly in the industrial sector.

Looking ahead, Lauchlan anticipates that the upward momentum will continue. “I think 2026 will be the best year in the last three or four — I’ve got no doubt about that,” he stated confidently. This optimism reflects a broader trend of renewed interest in New Zealand’s commercial real estate landscape, likely to attract both domestic and international investors seeking opportunities in a recovering market.