"If anything, we would expect activity to pick up further as many regional markets are at an earlier stage in the current upward property market cycle than Auckland is.
"Clearly there's a lot more confidence in investment property markets up and down the country and it is also being mirrored in the development market with the fundamentals now right for a return to new commercial building activity."
Little said the value of commercial consents was up 73 per cent across the country in the 12 months to April 2016, compared with the year to April 2010, when new development activity was at an all-time low.
While a 193 per cent increase (in consents) in Canterbury, as a result of the rebuild, was a big contributor, it was well exceeded by a 301 per cent increase in the Bay of Plenty, reflecting a phenomenal increase in development, particularly around Tauranga/Mt Maunganui.
Other regions in which the value of commercial consents was up by about a third compared with 2010, were: Waikato (34 per cent), Hawke's Bay (36 per cent), Wellington (32 per cent) and Otago (36 per cent).
"As with the property investment market, many of these markets are at the early stages of their current commercial development cycle and can be expected to ramp up more.
"The increase in commercial construction activity is in response to vacancy rates moving down for the first time in a number of years ... That is also igniting some rental growth as supply in those markets tightens up, although different regions are at different stages."
Little says there has been a tremendous amount of yield compression in Auckland and that has spilled over into other regions.
There has also been increased competition for investment properties and a lowering of interest rates.
"However, a strongly located and tenanted industrial property outside Auckland is likely to sell for at least one percentage point higher income yield than a similar property in Auckland. So if income yield is what you are looking for then there are plenty of good opportunities in the provinces to secure that."
Economic momentum
Despite the dairy downturn affecting many provincial regions, Little said this was being offset to a certain extent by a strong performance by non-dairy agriculture sectors, with horticulture being the standout and viticulture also benefiting from record international sales of New Zealand wine. Also helping is a big infrastructure spend, led by the Roads of National Significance programme.
Also speaking at the property expo, Christina Leung, senior economist for the New Zealand Institute of Economic Research (NZIER), pointed to multiple factors producing "decent economic momentum".
She said chief propellers of broadening regional economic activity were strong population growth, fuelled by record net migration numbers, a substantial increase in construction activity and a big pick up in tourism. While a slowdown in net migration is expected, the big build-up in immigrants will have a continuing positive impact on the economy for a number of years.
Leung said this strong population growth has led to a ramping up of residential construction in Auckland and the regions. Commercial development was also just starting to pick up in the regions, she said.
It was most noticeable in new office building, reflecting increased growth in the service sector, and in guest accommodation to provide for growing numbers of tourists.
Leung said NZIER expects tourism to be a key driver of economic growth over the coming years, injecting income into the regions, creating jobs and encouraging people to move to where employment opportunities are. "This in turn will create further demand for housing and commercial premises which will fuel more construction activity."
