Colliers International has just released their November commercial property Research Report for New Zealand and according to Alan McMahon, Director of research and consulting at Colliers International, the Reserve Bank's Financial Stability Report is not all bad news.
One of the more telling charts from the comprehensive Financial Stability Report issued this month shows overdue debts to merchants, manufacturers, and builders growing sharply. Other signs of business stress illustrated in the report include much reduced profitability compared to three months ago.
However, expenditure on debt servicing and transport is reducing, and labour costs can be expected to grow more slowly in 2009.
Tenants of buildings in whatever sector don’t need to read the Reserve Bank’s report to know that times are getting tough. In addition to limiting expenditure, they are also seeking to structure future cashflow to ensure as much predictability as possible. In property terms, this means non-market rent review mechanisms, and shorter leases with options to renew. Tenants of ground leased property who are exposed to ground rent reviews as well as occupational reviews are particularly aware of the risks.
Click on the image above to view Alan's Interview on TV3.
Click here to read the full report in PDF format.
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Alan McMahon,
Darren Park