Rotorua Commercial Property Market Shows signs of Recovery and Adaptation

The commercial property market has been experiencing a significant shift in recent times, with various factors influencing its dynamic recovery, according to One Agency Property Team's David Schmidt.

Commercial Interest Rates and increasing yields: Interest rates play a crucial role in the commercial property market's stability and attractiveness to investors. Over the past few months, commercial interest rates have remained relatively steady, increasing to and now hovering around 10%.

Investors are becoming more optimistic about the potential returns, there is the expectation that yields on commercial properties will continue to rise as they continue to look for a bargain and seek to capitalise on the expected yield growth.

Impact of E-commerce on Retail Outlets: The rise of e-commerce has transformed the retail landscape, particularly for larger retail outlets. Facing increased vacancy rates, they have adapted to changing consumer behaviour driven by online shopping habits.

Simultaneously, this shift has created opportunities for smaller retail shops. Post-COVID-19, entrepreneurial individuals are starting small businesses that provide localized retail experiences, leveraging the desire for personalised shopping.

Booming Leasing Market for Small Retail Shops: Despite the challenges faced by larger retail outlets, the leasing market for small retail shops remains buoyant. The increased entrepreneurial spirit has led to a rise in demand for small commercial spaces, as aspiring business owners seek to cater to niche markets. This shift showcases the adaptability of the commercial property sector and its ability to cater to changing market dynamics.

Hospitality Sector Recovery: The hospitality sector is showing gradual signs of improvement as international borders reopen and tourism reemerges. Hotels, restaurants, and entertainment venues are slowly witnessing increased footfall, helping businesses recover from pandemic setbacks.

The pent-up demand for travel and experiences is a driving force behind this growth, contributing to the sector's slow but promising recovery.

Evolution of Office Space: The modern workplace has undergone significant changes, driven by the option of remote work and hybrid office models. Larger organisations are finding value in consolidating their office spaces while downsizing to accommodate flexible work arrangements.

On the other hand, smaller organisations are embracing shared office spaces and co-working environments to optimize costs and facilitate collaboration. This transformation reflects a shift in organisations' approach to workspace utilisation, ensuring a balance between remote work and the benefits of physical office presence.

The commercial property market is undergoing a significant transformation, driven by economic shifts and the effects of the COVID-19 pandemic.

While large retail outlets face challenges with the rise of e-commerce, smaller retail shops are thriving as entrepreneurs capitalize on the demand for localized retail experiences.

The recovery of the hospitality sector and the evolving nature of office spaces demonstrate the market's resilience and adaptability.

Businesses must closely monitor these trends to adjust their strategies and succeed in the ever-changing commercial property market.

Written By David Schmidt

Principal of ONE AGENCY PROPERTY TEAM