Retail properties are leading a surging Hawke's Bay commercial property market, says Turley & Co's commercial property report to the end of January.
"The turnaround in local consumer confidence is at polar opposites to 24 to 30 months ago," the report said.
"Retail spending is up and vacancy is down.
"Well-tenanted retail investment properties rarely present in the market for long and these days often selling off-market."
Bayleys agent Rollo Vavasour said strong retailing attracted strong tenants such as Bunnings, making marketing the sale of its building far more viable than previously. The former home of The Warehouse languished part-tenanted until Bunnings recently took up the Hastings CBD lease.
The valuer and property strategist's report said Hastings' elongated mainstreet rents generally trailed central Napier, with a significant CBD vacancies but also significant was "a refreshed presence of re-strengthened or renovated premises such as Whitcoulls, Suzelle Lingerie and Kiwibank, etc."
"Rent affordability is a drawcard for local and national retailers, on top of a spike in local economy optimism and increased spending."
It said Paymark's December retail spending statistics for Hawke's Bay showed it had the country's biggest increase, up 11.1 per cent on December 2015.
Prime retail rents in Napier's CBD were projected to remain flat into 2017 "partly off the back of some already firm cost-led redevelopment rents and mild oversupply".
"There will be ongoing demand by leading retailers for prime Napier locations, especially as Napier's tourist destination status grows and consolidates."
The shift of Farmers "bolstered Napier's retail heart and improved the stature of Hastings St as an important CBD and Marine Parade retail link."
As a result lower Emerson St was experiencing higher vacancies "although during prime tourist times is particularly vibrant".
Hastings St developments included the Paxies site into four retail tenancies, the Commercial Building at the corner of Dickens and Hastings streets into a split-level retail complex anchored by Kathmandu and the three-story Post Office building into speciality shops and offices.
Taradale retail vacancies fell from 11 in 2014 to six in 2016 but despite the popularity of eateries there were four long-term vacancies.
"Tightly-held" Havelock North had few retail vacancies since about 2003, "bucking market trends in other locations", but LowMac's $25m Village Exchange development "adds a new dynamic".
Bayleys commercial manager Daniel Moffitt said there was strong out-of-town interest. The December auction of the Edgewater Motel was held in Auckland, attracting 50 bids and selling for $3.75million - a 6 per cent yield according to the Turley report.
Colliers International director Cam Ward said this month was the busiest any of its agents had experienced, including the pre-GFC period, after the "busiest year ever" in 2016.
He said 2017 was "very rosy" across all commercial property sectors, underpinned by a strong residential market and regional economy.
"Business people are experiencing good times in their business and are happy to invest in their business - the owner-occupier market is really strong.
The investor market was "red hot" and bare land and lower-quality properties "snapped up" thanks to an increasing number of speculative developments.
"People are buying land or buildings to develop, knowing they are going to be filled up.
"I reckon it's going to be the best year ever."