Confidence in New Zealand's commercial property market has bounced back to its second highest level in two and a half years, with investors rating Tauranga as the top location and industrial as the standout sector.

Colliers International's latest quarterly Commercial Property Investor Confidence Survey, released today, shows a net positive 26 per cent of respondents expect investment conditions to get better over the next 12 months.

The net positive result (optimists minus pessimists) is the second highest since December 2016 and equal to the December 2018 result, following a slump to 22 per cent in the March 2019 survey.

Chris Dibble, Research and Communications Director at Colliers, says the coalition government's rejection of a capital gains tax appears to have contributed to the rise in sentiment.

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"Forty per cent of respondents stated they intend to invest more now that the Tax Working Group's capital gains recommendations have been rejected.

"This seems to have brought greater certainty around market conditions throughout the country. Respondents returned a net positive score across all 12 regions surveyed for only the second time in five and a half years."

Tauranga/Mount Maunganui reclaimed the survey's top spot after being eclipsed by Queenstown in the last quarter, with a net positive 59 per cent.

Simon Clark, Managing Director of Colliers in Tauranga, says investment fundamentals are strong across all sectors.

"There's a huge appetite for quality stock among local and out-of-town investors, with the best properties selling fast and for record prices.

"We recently sold a Papamoa childcare investment property only two weeks into a five-week marketing campaign, at a record low yield of 4.8 per cent.

"This activity is being driven by the strength of the wider Bay of Plenty economy. To keep up with demand, Colliers continues to expand in the region, with a new office in Katikati opening earlier this month and another in Te Puke next month."

The survey's top five regions were rounded out by Queenstown in second (53 per cent) followed by Wellington (38 per cent) and Hamilton (37 per cent), with Auckland and Nelson tied for fifth (36 per cent).

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Industrial remains the standout sector across the main centres, with respondents particularly hot on Auckland and Wellington.

Auckland recorded the highest industrial score in three years, with a net positive 70 per cent.

Colliers' National Director of Industrial, Greg Goldfinch, says there's no sign of the industrial sector slowing down.

"There continues to be an avalanche of capital looking for a home, ideally in the Auckland industrial market, but that is spreading to other centres which are benefiting.

"Investor demand for quality properties is high, but a shortage of stock for sale means options are limited.

"In line with the lack of supply, yields are continuing to compress as the low interest rate environment looks to linger for the foreseeable future, putting further pressure on pricing."

In Wellington, industrial has reclaimed its place as the top sector, with a net positive score of 57 per cent, after taking a backseat to the office market in the December 2018 survey.

Tim Julian, Associate Director of Industrial in Wellington, says the sector continues to set records.

"Smaller industrial premises in Petone are leasing for well in excess of $200 per square metre, and it is now challenging to find anything for less than $100 per square metre anywhere in the region.

"With stubbornly low vacancy rates and no land available for development outside of Upper Hutt, we anticipate industrial rents will continue to rise strongly this year."

In Christchurch, respondents' confidence in the industrial sector resumed its growth trajectory, now at a net positive of 32 per cent.

Sam Staite, Director of Industrial in Christchurch, says the market is continuing its stellar run.

"Demand remains strong across the gamut of investors – from institutions to owner-occupiers and smaller private investors.

"I think people are attracted by its simplicity. With industrial, we're talking about four walls and a roof. It's a very simple asset with lower depreciation, and fewer repairs and maintenance than some other sectors."

In the overall Christchurch market, optimists finally outweighed pessimists for the first time since December 2016, resulting in a small net positive score of 0.4 per cent.

The survey also indicated stabilised market conditions in Christchurch, with almost half of the respondents providing a neutral response.

In second-ranked Queenstown, Colliers Managing Director Alastair Wood says the district continues to attract a high level of interest in the commercial sector.

"Retail, industrial, commercial and tourism-related property remain strong performers, especially town centre retail and commercial and Frankton industrial.

"Factors including expected population growth, ongoing construction activity and tourism combined with record low borrowing rates are continuing to underpin property values and rents in these areas."

There were 1671 responses used to construct the survey results.