The good things about tough times

It would only be those who have been stranded on a desert island (without internet) for the last six months who would not be aware that the industrial real estate market has now entered a very different phase. And that this new phase requires very different attitudes and behaviour and skills on the part of agents, vendors and purchasers. Sales are more difficult to conclude. Leases are harder to get across the line. Agencies are more plentiful.

It is all very reminiscent of the market during the GFC – for those whose memories are not simply short term. There are some differences from the market during the GFC – amongst them that there are far fewer vendors who are desperate to sell. And of course that we have historically very low vacancy rates.

But the major similarity is that the number of transactions being concluded is dramatically lower than we have experienced over the past few years. And with the two big show stoppers for the New Zealand industrial market (Rugby World Cup and General Election) coming up, we don’t see the transaction numbers increasing any time soon. Although we would argue that interest rates are often something of a red herring in the transaction discussion, they have not peaked, and it is likely to be some months before they do.

So what are the good things coming from this slowing market? Just as occurred during the GFC, vendors who really are serious about selling are having to get serious about meeting market expectations. Because there are far fewer buyers who are desperate to buy than sellers desperate to sell. And of course none of the banks are really seriously interested in funding purchases – although we are seeing signs that that may change as the year goes on.

But the really good thing that we are seeing come back into the market is the level of professionalism. There will always be Cowboys and Idiots in the market. But increasingly we are seeing suits and ties re-appearing. And communications that recognize who the client is, and how they should be treated. And information be freely provided, rather than having to be extracted like ingrown wisdom teeth.

Phone calls are being returned. Emails answered. And generally some very different attitudes coming to the fore.

So much as we might bemoan the slowdown in the market, we need to be appreciative of the re-appearance of professional attitudes. Long may it continue.