5 Feb 2026
Over the past year, PMG navigated a wide range of challenges. A subdued economic environment reduced business confidence and led to delayed decision-making, with multiple lease proposals often required to secure new customers. Capital flows and liquidity throughout the year reflected the realities of the market cycle.
In slower markets, achieving strong outcomes requires even greater focus and effort. Throughout 2025, the PMG team remained committed to its goal of being the Property and Fund Manager of Choice, never losing sight of its customers or long‑term objectives.
Looking at 2026, while some volatility will remain, the foundations for growth are stronger. Our CEO Scott McKenzie shares his views on the year ahead, the key themes unfolding, and what they mean for commercial property investors.
Lower interest rates have begun to stimulate demand. The last quarter of 2025 saw a material lift in leasing activity across the portfolio. 2026 is shaping up to be a year defined by further momentum.
Smart local and offshore capital is flowing into the commercial real estate market with an expectation of growing rents and value throughout the year.
Despite the ‘bumpiness’ in markets resulting from global geopolitics, New Zealand’s economy is steadily picking up. An improving labour market and growing consumer confidence continues to translate into businesses' willingness to invest. We’ve seen this positive sentiment reflected among our own investors too, with our latest investor survey showing increased confidence for the year ahead.
2025 marked a turning point in geopolitics. The return of Donald Trump to the U.S. presidency has driven a renewed focus on defence and energy security.
We are moving into an era of global ‘re-anchoring,’ spurred by the America First policy as countries recalibrate the new reality without the U.S. as a reliable trade partner and ally. Despite this rupture, markets continue to take all of this in their stride with the S&P 500 up 18% for the year.
A simmering medium-term concern remains the record-high global debt and widening fiscal deficits, with the issue currently sitting in the ‘too hard’ basket for most global politicians to address. Bond markets are awake to these dynamics. Investors are already demanding higher long-term yields. We can expect this fiscal strain to deliver further ‘bumpiness’ in markets in the years ahead. It’s fair to say, by the time we reach the end of the decade, we’ll likely to be looking at a very different global economic picture.
Despite all the medium-term global challenges, the outlook is positive for New Zealand. GDP growth is forecast in the 2.8 to 3.4% range, supported by lower interest rates, an exchange rate below the long-run average, supporting exports, and a large bow wave of government-funded infrastructure investment on its way.
This being said, with some large global structural changes underway, care and discipline, combined with a strategy to continue to grow income resilience through scale and diversification will be key to ensure capital preservation, sustainable cash distributions, and growth in value over time.
We’ve traditionally considered our geographic position to be something of a curse. But within today’s context, it helps us to be viewed by foreign investors as a stable and secure home for their capital: capable of preserving value and generating returns, with current appeal further enhanced by the relative weakness of our dollar.
For the likes of offshore funds and private capital, our real estate provides an attractive opportunity to diversify risk via a more straightforward tax framework, potentially higher yields and less competition. We saw this last year, when the Manukau Supa Centa sold for $161m. Although the buyer was a domestic property fund, the sale attracted multiple bidders, around half of which were offshore.
While it’s true that international investors tend not to look beyond our biggest city, the influx of foreign capital into Auckland can have a stimulatory effect on domestic investment in our wider commercial property market. Although Wellington’s property market remains subdued, history has shown the market works in cycles, and if you’re a counter-cyclical investor, then arguably this year could be a great time to turn attention its way.
Christchurch, on the other hand, is buzzing. PMG have been invested in the city for some time now, and we’ve seen growing demand across our office, industrial and large-format retail properties, supporting rents and maintaining an energy that currently can’t be matched anywhere else in the country.
After a period of value adjustment, New Zealand’s commercial property market is entering a new growth phase. Industrial, retail, childcare and the healthcare sectors are well-positioned for continued growth in rents and value this year, while quality office property is expected to rebound.
From a portfolio perspective, property sectors continuing to satisfy occupier demand will demonstrate sustained performance for the year:
Our latest customer surveys from both tenants and investors revealed the growing importance of sustainability initiatives – less about policy statements, more about outcomes.
At PMG, our priority is the continual improvement and efficient management of our portfolio. Waste, water, energy and carbon reduction initiatives are enabled through the use of technology and AI-powered building management systems with real-time management information. Reducing waste helps keep costs down for our customers (tenants), supports sustainable returns to investors, and is good for the environment.
Risk management and governance remain critical. Interest rate risk, regulatory change, and geopolitics point to a choppier operating environment. Strong governance frameworks, scenario planning, and cost discipline are essential to balancing growth with resilience.
Lower interest rates, returning capital flows and a stabilising property market all point to a year of opportunities for investors focused on income, quality, and long-term fundamentals. While risks remain, the relative appeal of commercial property is strengthening, particularly as cash deposits remain low and yield gaps widen.
At PMG, our focus remains on building the strength and resilience of our funds with scale. Prioritising resilient sectors, staying active in our management approach, and continuing to deliver reliable, tax-efficient income for investors. In a year defined by momentum, staying selective, agile and disciplined will be key.
Learn more about commercial property for the year ahead by joining our Outlook 2026 series here.
Disclaimer: The information in this blog is of a general nature and was current as at January 2025. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013 and does not take your individual circumstances and financial situation into account. As with any investment, commercial property carries risks, including the risk of loss of capital. Past performance is not a guarantee of future results. PMG does not provide financial advice about whether an investment in one of its funds is right for you. Please seek advice from a licensed financial advice provider before making any investment decisions.
