I’m often asked by people who notice a spate of FOR LEASE or TO LET signs going up in an area if it is a strong indicator of where the market is at.

My answer is always the same… it depends.

This is often not what people want to hear. They want a black and white answer. But I have watched too many twists and turns in the market to make broad brush predictions or comments, especially based on superficial evidence such as the number of FOR LEASE signs in an area.

Of course eyebrows are raised when a street starts to sprout a number of signs in a row. But it is important to analyse carefully what is behind the signs.

I had lunch with my wife recently in an established Auckland suburb. She commented on the number of vacant retail outlets, assuming business generally was bad.

But I happened to know that a number of the retailers in that area had a running issue with the local council and they had also been impacted by the development of a new shopping centre in a nearby suburb.

So whilst business generally was not great, it was not as bad as might have been assumed from a superficial examination. There were a number of factors involved in the vacant spaces.

There is no doubt retail is tough right now, and there will be more vacant premises with consumer spending down. But there is always a range of factors to consider. Sometimes the product was not strong in the first place or other influences could be at play that having nothing to do with the state of the property market.

It’s a different story when we see FOR LEASE signs on industrial and commercial space at the moment. The number of signs and the published statistics about vacant space don’t tally.

A lot of the space on offer is actually for sub-lease as tenants reassess their space requirements and look for a range of ways to either generate income or reduce costs.

So right now, is there a lot of vacant space? Is there a glut of space, an oversupply, or a lot of businesses in trouble? Well, still it depends!

I always look at each area on a case by case basis and dig around to find the real story before jumping to any conclusions.

The drive-by approach can give entirely the wrong impression and lead you totally up the garden path!

Tags: commercial property leasing, industrial property leasing, retail property leasing

This entry was posted on Tuesday 7th April 2009 and is filed under Property Leasing. Both comments and pings are currently closed.