This month we try to solve the mystery of why office vacancy is trending up but is currently going down, and how investors can feel things have got better for the last year but are going to get worse, all against a mysterious background of magically disappearing depreciation. More logically, we also find that Australian businesses share the same concerns as their New Zealand counterparts when it comes to building selection.
Landlords concerned about the negative impact of building structure depreciation denial and changes to deferred tax liability announced in the budget might take some solace from the boost that the GST increase may give to their rent review negotiations next year. Consensus forecasts of CPI (NZIER, June 22) now predict a peak of 5.2% in June 2011.
Increasingly, the rent review mechanism in leases written in recent years requires the movement in CPI to be taken into account. As market rents started to increase quite quickly in the early years of the century, tenants typically wouldn’t attach much importance to the CPI indexation, assuming market rents would continue to rise. However in recent years, CPI - even at its recent modest level of around 2% per annum – has outstripped market rental growth, which has typically been negative over the most recent two or three year period between rent reviews.
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Sales,
Office Leasing,
Retail,
Industrial,
Valuation and Advisory Services,
Corporate Solutions,
Research & Consultancy,
Auckland Office,
North Shore Office,
South Auckland Office,
Wellington Office,
Christchurch Brokerage,
Dhilan Balia,
Alan McMahon