Southland office market static but quality retail, industrial in demand

26th February 2025 By Staff Reporter | news@propertyticker.co.nz | @propertyticker

Office market activity is largely static in Invercargill but demand for prime retail and industrial space across Southland remains strong, according to CBRE.

The agent’s New Zealand Regional Figures Report – Southland for February 2025 showed A grade office space remained scarce in Invercargill but there was an excess of categories B and C.

Rental rates remained relatively stable but there was little leasing activity in provincial Southland.

CBRE noted that provincial towns have a higher proportion of owner-occupied spaces compared to major urban centres.

On retail, the agent said that inner-city mall Invercargill Central successfully entered its second year of operation.

“The retail spaces on the ground floor are fully leased, as is the ground floor of the neighbouring HWR tower.

“Despite the 2023 closure of the H&J Smith department store and the 2024 closure of Torpedo 7 being significant losses for the city, they have paved the way for new retailers such as Gun City, Evo Cycles, and Ballantynes to enter the market.”

However, Invercargill faced an oversupply of secondary retail space, particularly in buildings that were earthquake prone.

“In the wider Southland region, there is a demand for high-quality retail spaces, though many earthquake prone buildings remain unoccupied.”

CBRE said there continued to be a shortage of industrial space in Southland, especially in Invercargill.

“Over the past two years, rental prices have experienced significant growth. This growth has come about even though transactions have been limited due to supply constraints, rising mortgage interest rates, and tough economic conditions.

“New purpose-built rentals are commanding higher prices, but these prices are typically based on cost-plus-margin calculations rather than prevailing market rates.”

CBRE’s New Zealand Regional Figures Report – Southland for February 2025 can be read here.