Latest occupancy figures show mixed trends across commercial sectors
The most recent update on commercial and industrial occupancy in Hamilton, conducted by CBRE Research and NAI Harcourts, shed light on a variety of trends, showcasing the dynamic nature of the city's business landscape and some challenges ahead.
Hamilton's industrial sector witnessed a modest increase in vacancy rates, rising from 1.2 per cent at the end of 2022 to 1.6 per cent by December 2023.
This uptick, representing less than 35,000 square metres of available space, was largely attributed to the emergence of numerous small industrial unit developments across surveyed areas.
Despite this increase, the growth in Hamilton's industrial sector has remained robust, with rental prices for new warehouse buildings increasing by as much as 10 to 15 per cent.
Factors such as escalating land costs, materials, construction expenses, and intensified competition among tenants have contributed to this upward trend.
However, amidst these changes, concerns about the future development pipeline linger, as softer economic conditions cast a shadow over anticipated supply growth.
The survey indicates a decline in planned industrial projects, with approximately 24,200sqm slated for development, compared to 52,000sqm recorded in the previous year's survey.
While this decrease may alleviate pressure on existing vacancies, it also underscores the potential challenges in sustaining the sector's momentum.
In the office sector, the Central Business District (CBD) of Hamilton witnessed a reduction in overall vacancy rates, dropping by 0.6 per cent to 9.5 per cent by December 2023.
Notably, Grade A vacancy remained relatively stable, while Grades B, C, D, and E experienced minor fluctuations, with D and E grades now well into double digits.
With an increasing emphasis on work environments and corporate culture, demand for high-quality office accommodation is expected to remain robust.
Despite the rise of hybrid working models, companies are progressively shifting their focus back to the office as a primary workspace.
Contrary to the positive developments in the industrial and office sectors, the retail sector faced challenges, with the CBD retail vacancy rate rising from 7.9 per cent in June 2023 to 8.9 per cent by December 2023.
The departure of major retailers like JB Hi-Fi from Barton Street significantly contributed to this increase.
Moreover, economic headwinds, including sticky inflationary pressures, rising interest rates, and uncertainties surrounding consumer spending, have dampened retail sales values over consecutive quarters.
While the sector continues to navigate these challenges, projections suggest a potentially turbulent period ahead, as mortgage rates and employment uncertainties loom over household spending patterns.
In summary, Hamilton's commercial real estate landscape exhibits a dynamic interplay of factors across its industrial, office, and retail sectors.
While industrial and office markets demonstrate resilience amid shifting conditions, the retail sector grapples with ongoing challenges.
As stakeholders navigate these complexities, access to comprehensive occupancy data remains essential for informed decision-making and strategic planning in Hamilton's evolving business environment.
For detailed insights into Hamilton's industrial, CBD office, or retail surveys, interested parties are encouraged to reach out to hamilton@naiharcourts.co.nz