Despite ongoing global headwinds, New Zealand’s commercial property market is well positioned for a prolonged expansion, according to the latest research from Colliers.
Strengthening underlying data and improving sentiment across the business sector made “green shoots” the buzz term in the final quarter of 2025.
The Colliers Research team have released their New Zealand Research Report for February that summarises the positive end to last year that has left the property market poised for a resurgence.
Hamish Fitchett, Director of Research & Economics at Colliers, says while the term green shots verged on cliche, there was plenty of merit to its usage.
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“The NZIER’s Quarterly Survey of Business Opinion for the final quarter of 2025 showed the highest level of general business confidence since 2014,” Fitchett says.
“Meanwhile, Colliers’ Activity Radar, which plots key indicators of activity that are relevant for different commercial property sectors, suggested the economy and commercial property markets are improving.”
Recovering transaction activity, attractive yields, and strong growth prospects caused an influx of lending for commercial properties in the final months of 2025.
Data from the Reserve Bank of New Zealand notes lending from banks for commercial property development was up almost 30 per cent in the year to December 2025. This influx of funds into the market is being encouraged by both low interest rates, with the Official Cash Rate at 2.25 per cent, and improved investor confidence.
“Non-performing commercial property loans trended down over 2025 and with sound growth fundamentals in place, banks are lending and transaction volumes are rising,” Fitchett says.
“We have seen as global geopolitical volatility rises, investors are searching for diversification opportunities or assets viewed as traditional safe havens and areas of our commercial property market align with these requirements.”
The February research report also mapped sector yields and vacancies by cities to get an insight into where the market resurgence will be most potent.
“Future developments are being determined by long-term investor fundamentals and less by the short-term business cycle fluctuations. Where strong returns are being anticipated, development is occurring. We are observing strong demand for prime properties, and this is where development activity will drive market growth.
“Auckland’s premium office market has consistently provided strong yields, and this has encouraged the development of over 70,000sq m of new premium stock in the city during 2025.
“We’ve started off the year with a strong economic base. Low interest rates have caused economic activity to start recovering and investor confidence has returned.
"International risks have increased, but for New Zealand markets these risks remain exactly that, risks. Businesses are confident about the future as they recognise the material strengths and opportunities that are driving our economic recovery.”
Casting his eye forward, Fitchett says there are some interest points to watch on the domestic front that will impact the local property market this year.
“The impending opening of the City Rail Link and potential congestion charging in Auckland could influence the renaissance of the secondary office market and demand for space in that midtown precinct.
“Also, retail and warehousing requirements is an area to keep an eye on as our e-commerce businesses take the next step towards q-commerce, known as quick commerce, given the growing demand for one-day deliveries.”
- Supplied by Colliers
