NZ Property Investor

COMMERCIAL BLUES

PART I

It’s not so long ago that the commercial property sector was tempting lots of residential investors to switch their allegiances. In the face of sky-high house prices, low yields and a swathe of tax and tenancy law changes, the higher yields and less troublesome tenancy arrangements were highly attractive.

But as the weeks of struggle against Covid-19 continue, it looks as though it could take a particularly heavy toll on the commercial property sector. While much attention has focused on the arrangements between residential tenants and landlords, it’s actually those between commercial landlords and their tenants which are more precarious.

That’s because people always need somewhere to live. But if a business is not able to operate, or is put out of business permanently, it does not need a premises. Forecasts for how hard the economy will be hit by the Covid-19 crisis vary widely, but it is certain that many businesses will not survive – and, in turn, that will impact on many commercial landlords going forward.

LEASE DILEMMAS

Already though, commercial property has been given a mighty shock by the lockdown. The forced closure of nonessential

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