Monthly Archives: December 2022

Employee Benefits How do you measure the health & wellbeing of your team?

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There has been a lot of talk lately around employee health and wellbeing, especially with the struggle for employers to attract and retain staff and recent initiatives such as Mental Health Awareness Week. We all know that a healthy workforce leads to a healthy business but what is the right approach for employers to health and wellbeing and, if the goal is to ‘improve’ the health/wellbeing of the workforce, how can you measure this?

Defining what wellbeing is and why it matters to employees The term ‘wellbeing’ is multi-faceted. It includes everything from the physical health of a person to their mental and spiritual state, social interactions, cultural engagement, and financial situation. Gone are the days of the lifelong nine-to-five career with a gold watch at the end. Employees are now expecting their employers to value their wellbeing and offer flexible working arrangements – at a minimum.

The measure of success from an employee’s perspective has changed from merely financial rewards to aspiring for an overall package that affords an attractive lifestyle for them and their family.

  1. Why should wellbeing matter to employers? An employee in good general health contributes to a safer workplace and is proven to be significantly more productive
  2. Given the lower rates of absenteeism, increased output of quality work. In a tight labour market, it is crucial for employers to not only offer a competitive salary or wage but to go that step further and provide additional benefits that will impact their life and wellbeing in a tangible way. Many employers offer discounted gym subscriptions or social/competitive sporting events, weekly yoga sessions or onsite massage therapists. Some businesses are implementing a group life, disability, or critical illness insurance plan to provide peace of mind to an employee and their family. More commonly, in recent months, organisations have instigated health plans for all staff with universal acceptance to cover treatment in private health facilities or assist with day-to-day costs such as GP visits, dental check-ups and prescription lenses. This continues the trend of health insurance plans as the most desired employee benefit in New Zealand.
  3. As well as looking after the health of the employee these plans help avoid the lengthy wait they might otherwise face in the public health system, and supports them to recover faster and thus return to work sooner. There are currently 200,000 New Zealanders on a health-related wait list and forty two percent have been waiting more than four months.
  4. How do you measure wellbeing? To attract and retain a happy/healthy team, businesses would do well to use the approach of a medical check-up when it comes to measuring the health & wellbeing of their workforce. For example when visiting your GP there are the routine physical checks however there is often equal weight given to other external factors (think alcohol consumption, family or work-based stress). Likewise, in addition to focusing on the physical health of employees it would benefit a business to reflect on the wider aspects of their employees’ lives such as family commitments (ie. school or day-care routines) and other extra-curricular obligations or pursuits. A simple online or anonymous survey is a good way of gathering the wider picture of what is important and where new initiatives or benefits may deliver positive outcomes.

Although it is not easy to measure wellbeing here are some ideas once you have decided to get focused around your team’s wellbeing –

  • Decide where you expect your business to sit in relation to your competitors (below/average or an ‘employer of choice’ for wellbeing?)
  • Nominate a wellbeing champion or committee in a similar vein to what a social club committee might be. What would a happy/healthy team look like to your business?
  • Attempt to define the current culture of health/wellbeing – in practical terms are sick days generally encouraged or avoided/discouraged?
  • Next Steps

It is critical to appreciate the impact that wellbeing has on individual employees and the positive benefits this can have on a business. We recommend becoming intentional by implementing a wellbeing strategy that is tailored to your team and their working environment and that delivers a positive impact on their health and lifestyle. If you are undertaking salary/wage reviews it would be the perfect time to consider alternative benefits that go over and above a competitive pay packet. Show additional value and demonstrate that yours is a business that cares about your people and their wellbeing. Need help or have questions?

Your ICIB Life & Health team is here for a no obligation chat. Icib.co.nz/products/life

Plan to Make 2023 Your Safest Year Yet 

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 2022 has seen two notable cybersecurity incidents: the significant data breach of the Pinnacle Midlands Health Network and the white-hat hacking of the Christchurch Hot Pools.   

While the Christchurch breach was downplayed as having been conducted by an “ethical hacker” intentionally identifying security vulnerabilities, the important takeaway in both cases is that a security hole in the systems was breached, and many customers’ data was exposed. In businesses that no doubt thought they would not be targeted.   Businesses were not the only victims this year either.

It was recently reported that a pensioner lost $134k after his online bank accounts were hacked, and customers of Unity Bank in Hastings were victims of a Bank Identification Number (BIN) attack – proving kiwi banks are a growing cybercriminal target.   This uptick was recently explained by Forbes Magazine who said “Cybercriminals thrive in times of uncertainty.” And that during this time of economic downturn businesses should be aware that “Threats like phishing, ransomware and business-email compromises have a significant impact on the health and viability of a business.

Beyond financial consequences, a breach can also lead to loss of customer trust and significant reputational damage.”   Closer to home, CERTNZ responded to 2,001 cyber incidents in Q2, 2022 with a direct financial cost of $3.9m. Phishing and credential harvesting, scam and fraud cases and unauthorized access incidents accounted for 94% of these incidents – confirming that human connection is still the weakest link when it comes to cybersecurity.

And just to drive the point home, if Q4 2021 (with a reported financial impact of cybercrime in NZ of $6.6m) is any indication, this holiday season will see a major cybercrime impact on businesses and individuals in NZ, and an increase in cybercrime can be expected in 2023.

So, what can you do about this?

  1. Identify your vulnerabilities with a comprehensive cybersecurity audit by an independent, trained professional. You wouldn’t get your accountant to complete your financial audit, and neither should your IT department/MSP undertake your cybersecurity audit. Impartiality is imperative.
  2. Determine your potential for damage with a risk assessment.  Understanding your risks goes a long way to protecting your company. Assessing your risks means understanding the “what if’s” that threaten you every operations, identifies gaps and provides opportunities to take preventive measures.
  3. Create a robust risk management program.  There are a few ways to handle risk treatment. Avoid the risk- remove the opportunity completely. Mitigate the risk – put measures in place to lower the risk. Accept the risk- the cost of protection outweighs the threat.

These are the three most common responses to risk treatment and set the countermeasures against each scenario in the assessment.  We have identified that the lack of robust risk analysis and treatment plans is common across New Zealand.

Throwing cybersecurity technologies and employee awareness training at the problem can only go so far. Moving into 2023, the focus needs to shift at the Board, owner, and executive level to understanding cybersecurity gaps and the risks to businesses and plugging them.

Cybercrime is unpredictable, and the New Year is a good time to start taking a top-down cyber risk management approach to ensure your business is secure.

Introducing GOVERN.  From 2023 Hartley & Associates will now be known as GOVERN Cybersecurity. www.govern.co.nz We are excited to continue to work with businesses to master their cybersecurity resilience, and look forward to introducing tailored training packages for board members and C-Suite executives. 

Looking ahead: The pandemic’s economic ripples

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The pandemic and the recent relaxation of restrictions continue to reverberate through the global economy and cloud the outlook. For insight into what may lie ahead, Jarden investment strategist and economist John Carran shared his thoughts, at the time of writing on 18 November 2022.

Through the haze, we see potential improvements in inflation but also see the global economy flirting with recession. In this environment, financial markets may waver in the near-term. Longer-term, prospects for share markets and bonds still look promising. The most glaring consequence of the pandemic, and the responses to it of governments and central banks, has been rapidly rising prices.

Clogged supply chains and the war in Ukraine, combined with rampant consumer spending, have caused prices for energy, food, and goods to rocket up globally. Record low interest rates boosted house prices and led to higher housing-related costs. Despite the immediate headwinds for New Zealand’s economy, household finances are in reasonable shape, with many having built their savings over the pandemic.

This could provide some buffer to tougher conditions ahead.  With global supply chain pressures now easing and commodity prices falling, inflationary pressures may soon ease. Cooling housing markets in New Zealand and elsewhere are also expected to gradually moderate inflation. However, prices in consumer services tend to be stickier. Therefore, although total inflation is expected to continue edging down, there will likely be a significant remnant that will linger for longer.

How long high inflation lasts is also likely to be influenced by pressures in the labour market and how fast wages grow. This will impact the pace of consumer spending and the degree to which businesses pass higher wage costs on to their customers. This is a key risk for central banks in their quest to get on top of high inflation. While heated labour markets may cool somewhat in the first half of 2023 as labour market churn settles down, it may take a spell of higher unemployment to settle wage growth to a more sustainable rate. Although there are reasons to expect inflation pressures to ease a little in the near-term, the US Federal Reserve (the Fed) and other central banks are unlikely to slow the pace of interest rate increases this year.

Central banks presently consider the risks of not doing enough to control inflation are worse than the risks of doing too much. However, by mid-2023, we expect many developed economies to show signs of slowing, including labour market cooling, and core inflation shifting down. This will likely be enough for the Fed and other central banks to halt their interest rate rises. Interest rate rises tend to influence economies with a considerable lag, so recent rapid rate increases should take their full effect through 2023. The more central banks raise interest rates in the near-term, the more likely it is that economies will enter recession next year and possibly through to 2024.

Therefore, it’s also possible that the general economic uncertainty, which has caused share and bond market volatility this year, may persist for a while longer. On the other hand, share valuations have materially declined this year, which means the potential return from shares in the longer term could be favourable. With interest rates now higher than they have been for at least a decade, bonds could similarly offer improved investment yields.

In New Zealand, we are facing similar inflationary and economic pressures to many other countries. The coming year could be challenging as recent interest rate rises start to bite. Many people that locked in low interest rates on one- and two-year fixed mortgages will soon be rolling onto much higher rates.

With the local housing market already feeling the effects of higher interest rates on mortgages and house prices falling almost 13 per cent from their peak at the end of last year, New Zealanders’ confidence and ability to spend could be adversely affected. Despite the immediate headwinds for New Zealand’s economy, household finances are in reasonable shape, with many having built their savings over the pandemic. This could provide some buffer to tougher conditions ahead. In this less certain environment, we often work with clients to diversify their investments in a way that meets their goals and timeframes. This can help with navigating the route ahead in a way that suits your individual circumstances.

 

Riding the wave of uncertainty

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The war in Ukraine, volatile European markets and currencies, and challenges across China’s political and economic landscape are just some of the issues impacting almost every country in every corner of the globe – including New Zealand.

We are broadly an import economy – and this handful of issues playing out on the world stage is having a direct impact on our economy, and on our businesses. Domestic Instability also on the rise Political instability is leading to economic instability.

Businesses are operating in a high-inflation, high interest rate environment – one that is extremely volatile and has ramped up very quickly. It is worrying that while the Reserve Bank and Government both took actions earlier in the year to limit inflation, these have had no real impact. Both external and internal costs are increasing as we see materials and people costs rising, resulting in margins becoming increasingly squeezed. Put simply, businesses are facing challenging times. And yet one-third of respondents to the BDO global risk landscape report said that they are unprepared for the risks stemming from geopolitical tensions. Focus on what you can control Businesses cannot control what happens in the geopolitical sphere, nor can
they control rising inflation or interest rates. But what they can control is their approach to managing risk. In a volatile environment when the conditions of doing business are changing daily, the only action businesses can really take is to understand and monitor the different risks to their organisation, and know what controls are in place to mitigate those risks to an acceptable level.

Strategies business owners can employ to help manage risk include:

  • Creating an up-to-date risk register
  • Working out what controls you have in place to help you mitigate these risks
  • Making actionable plans to improve where and how your business is protected against risk.

Most importantly, the above needs to become part of the fabric of your business plan – your risk register and action plan should be a live document that evolve with your business and the risk landscape. No matter your industry or size, your business is going to be highly impacted by inflation in some way. If there is a risk that inflation might increase by a further 5% in the next six months, consider  what your controls against that are. How much do you understand your costs, how detailed and regular are your cash flow reviews, and have you undertaken any scenario planning against different inflation projections?

Once you have acted on some of these points, you can then reassess whether you have reduced this risk to your business to an acceptably low or manageable level. Implementing the above is a key way that businesses can take back control in what is a highly uncertain political and economic environment. Riding the wave of uncertainty is about accepting that there are many events entirely outside of your control, taking place all over the world, which are having very real impacts on your business and your ability to achieve your strategic vision. But even as you accept this, you can still take action.

The best way to protect your business from uncertainty is to build resilience into your organisation. Developing a strong risk management approach that enables you to stay up to date with changes as they happen is key. Understanding what the impact is to your business and knowing exactly what levers you can pull to lessen those impacts, is really the only way to ride that wave and successfully come out the other side.

About the author: Michael Nes is a Business Advisory Manager with BDO. He has experience assisting both small and medium sized entities with a wide range of advisory services across a range of industries with a specialist interest in information technology and automation services. BDO are Chartered Accountants and Business Advisors. The firm is an independent member of BDO New Zealand and part of the global BDO network. www.bdo.nz

Valuing Hastings CBD – Revitalisation programme reaps rewards

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Williams’ Harvey undertakes a retail shop occupancy survey of the Hastings City CBD twice a year in April and September. Undertaking the most recent survey it was apparent that much of what the Hastings District Council (HDC) set out to achieve under the ‘Hastings City Centre Vibrancy Plan’ is coming to fruition.

The plan’s key target and outcomes were to encourage more people and more business by creating an environment and activities where customers, workers, residents, students and visitors could experience and enjoy the Hastings city centre. Given this was started pre-pandemic it is pleasing to see that so much progress has been achieved and the results are being experienced by many. The survey is based on retail shop numbers and includes main street retail, side street retail and overall retail vacancies. Shops that are empty whether leased or not are classified
as vacant, as are shops that are advertised as closing down.

Relocating shops are included as vacant in the block they are leaving but excluded from the block they are moving to. Our last survey, completed in November 2022 recorded
a slight lift in vacancies up to 11.24% from 9.68% in April. This equates to 30 premises being vacant as opposed to 24 premises. However, with all the new developments finishing, shop numbers have lifted from 248 to 267.

So whilst vacancy numbers look higher than the previous surveys, 19 new shops have been added and thirteen  ew tenancies which is very encouraging considering the impacts of Covid-19, The 300 East Block has seen big changes in the last year with the renovation of the Municipal Building now complete and includes three new hospitality premises that open to the Heretaunga Street East  frontage. Other premises to this side of the street are a Church premises and HB Today while to the northern side of this street there are three retail stores, Fun Buns (eatery) and City Fitness Gym. The overall general street environs have also been enhanced.

The eastern retail blocks known as the 200 and 300 East Blocks of the Hastings CBD have seen quite major developments in more recent years. These two blocks form part of a precinct the HDC identified as potential entertainment areas which have seen the street environs remodelled to provide for footpath dining areas, multiple planters separate curbside parking from the footpath areas and the overall general street environs have been enhanced.

A pocket park has also been developed around the corner on Warren Street. The 200 East Block has transformed with several of the building owners being part of the revitalisation. This gave other landlords and developers the confidence to reinvest in this block.

Historically, this block had fallen out of favour with retailers and experienced high vacancy levels and poor quality of tenants on short lease terms residing within the block. While not in the main retail strip there have been other substantial developments to the east end of town which have assisted in making this location very attractive to the retailers and bars/eateries.

These include the refurbished Toitoi: Hawkes Bay Arts and Events Centre, the multi-level Quest Apartment Hotel building currently under construction to the rear of the Opera House, The large commercial development known as the Tribune positioned on the corner of Karamu Road North and Queen Street East is now occupied by a range of retailers, Brave Brewery Bar and Restaurant and upper-level offices.

To the edge of the CBD the HDC has recently purchased a building to be redeveloped for the new Museum Research and Archives Centre and Rush Munro’s have also located Albert Square. The net result of the investment and development to these blocks and other areas at this eastern end of town has meant this part of town is looking fantastic. HDC and developers alike can take credit for achieving the Vibrancy Plans key targets and objectives now being the more preferred and therefore sort after location of the Hastings CBD.

However, it is pleasing to see that the plans for the same key targets and objectives are well underway for the Western blocks with the release plans of a three-storey apartment building, pocket park and laneway between Queen Street West and Heretaunga Street West.

Honey, I Shrunk the Equity!

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Reflecting on the past year and considering what’s to come in 2023.

How do we summarise the New Zealand property market in 2022? “Contrast” comes to mind. “Against the grain” might be another appropriate phrase. It was an exceptionally intriguing year for New Zealand’s property market.

Professionals at all levels of the sale and purchase of property recognised a significant shift in what had previously been a “sellers’ market” and as we head into 2023 it leaves much room for reflection. Although unrest was to be expected, given the noise of inflation post-pandemic, the nature of last year’s property market has brought about much to consider in the new year. Late 2022 saw a decline of house prices at about 4.5% nationally, leaving many surprised by the remarkably uniform decrease of housing prices from their peak in late 2021.

House prices in Wellington decreased by a whopping 11.7% from October 2021 to October 2022. In Auckland, the decrease in house prices peaked at 4.7% in October 2022 compared to the year prior. Decisions of the Reserve Bank continued to encourage the swelling of interest rates on mortgages, meaning property supply continued to weaken, and prices dropped.

The conveyancing sector finished the year on an unsure footing affecting all Kiwis on the property ladder. Scratching heads we ask: “What might the property sector hold for 2023?” The general echo was economists’ hypothesising that prices will continue to drop until the end of 2023. Furthermore, we have been warned to expect further increases to interest rates, with some suggesting we should be prepared to see fixed interest rates as high as 9% in 2023.

The uncertainty of a tightening property market appears content on following us through 2023. But like a wheel turning, the cyclic nature of the market means a decline in property prices will, at some point, move towards stability. Whether we can expect this in 2023 is uncertain. The market is influenced by various of internal and external factors, and therefore, any relief emerging through the year must be anticipated patiently. But it’s not all bad. We have recently seen some great initiatives introduced which have opened opportunities for one particular area of the market: first home buyers.

Of note are new strategies targeted at mitigating barriers to the purchase of a first home. One example is the initiatives of Kāinga Ora. Various innovative pathways have been created to encourage both families and individuals to join the property ladder. Of particular significance, Kāinga Ora is aiming to tackle one of the greatest obstacles for first home buyers – the dreaded deposit – by lowering the market expected 20% to a far more palatable 5%.

Whether it be the First Home Grant, First Home Loan or First Home Partner Scheme, Kāinga Ora is providing greater opportunities to take advantage of a decline in house prices. Couple these initiatives of Kāinga Ora with the increasing slowdown of vendors to the market, and 2023 may be one of the stronger years for first home buyers to get their hands on those first set of keys.

The value-to-income ratio continues to climb post-pandemic, meaning that first home buyers should feel more confident in their ability to find their first home. Kāinga Ora pathways are still relatively under-utilised, with much to be learnt among professionals and potential home buyers alike. However, innovative strategies like these bring about an optimism that more Kiwis may be able to achieve their goals and become homeowners this year. We look forward to continuing to provide conveyancing support to existing and new clients throughout Hawke’s Bay during 2023, and are excited by the opportunity to help more first home buyers achieve their goals through the strange but inviting nature of our current market.

Health and fitness trends for 2023

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What will the trends be for 2023 and can we use them to help us?

Wearable technology We have noted a big increase in the local and world-wide community using wearable technology. People are now more interested than ever in focusing on their health and wellbeing goals while being able to track their success along the way.

Wearables individuals measure the impact of their exercise sessions and ensure they were challenging themselves as it relates to heart rate zone, caloric burn, steps taken, recovery time, and exercise intensity. This trend has grown massively over the past 2 years and will only continue to grow in 2023.

With many options on the market from smart watches to fitness and GPS trackers it is worth well worth putting one of these on your Christmas list and definitely worth considering how you could utilise them in the health and wellbeing of your workplace in 2023.

Movement Snacks

An exercise snack or mini workout is a short bout of exercise that lasts for ten minutes or less and can be done multiple times throughout the day. There are a variety of benefits to snacking on exercise and movement.

Firstly, engaging in mini exercise sessions can help busy individuals stay fit and healthy while trying to manage a busy work and family life. From a motivational perspective it is far less intimidating to exercise for shorter durations throughout the day versus committing to an hour or longer exercise session. Many people around the world experienced the benefit of this new approach during the pandemic and lockdowns.

Many still love the approach and have confirmed that the trend is here to stay. People want to get the job done with less time commitment. Could you snack on exercise and movement during your working day?

HIIT Workouts

HIIT workouts have been high on the trend list for years now and will stay high for the years ahead. They require bursts of high-intensity strength and cardio exercises followed by periods of recovery. 30-45 mins of fun and functional exercises that get you BIG results fast! No two classes are the same.

Every class will challenge you, and have you coming back for more! People want to make sure that they are getting the maximum benefit possible during the time they spend exercising. Similar to the idea of maximizing effort with shorter mini workouts, they do this with the added bonus of a fun a social environment. One word of warning – these workouts should be balanced with easier low intensity sessions throughout the week.

Virtual coaches and classes

Virtual coaches and classes grew massively over the pandemic and kept the health and fitness industry in business.

Having access to on demand services that you can use in the gym, at work, while you travel and at home via an app is a trend that will continue to grow in 2023. By providing these services our community has now grown to include Australia, the UK, USA and Japan. Having the option to train at the gym three times per week and two times while you are travelling for work helps increase results.

Community and social groups

Being part of a community and social group is the key to your success with your health and fitness goals. The inability to be social and connect during the pandemic has made this trend even more popular as an exercise preference. Community engagement in outdoor and social group fitness settings has big benefits. Run clubs, group walks, group ocean swims, group rides are all seeing great numbers. Have you got one of these on your list to try in 2023?

What to do when there’s a fraction too much friction

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As we head into a new year it is timely to reflect on 2022 as you plan your our human resources considerations for 2023.

Talent sourcing was an ongoing challenge in 2022, but employers seem to have successfully revisited their talent acquisition strategies and practices, and are now shifting focus to workforce planning, resetting teams via team development and managing any friction. For 2023, setting a clear vision, engaging and developing staff, and building a culture that retains high performers will be important. However, one of the flipsides for employers is the need to carefully navigate workplace relationship challenges that have emerged over the past two years.

It’s fair to say that employers and employees alike are experiencing an overarching sense of wariness. Tolerance levels are frayed and various tension and conflicts are surfacing. It is important for employers, front-line supervisors and team leads to be acutely aware of the required processes around the conversations that need to occur.

Neuroscience has found the old adage ‘you can’t teach an old dog new tricks’ is incorrect. Our brains have a lot of plasticity and as such people can change their thinking and approach. Ensure clear expectations are set (clarity is kind!) and give feedback, albeit appropriately, to create awareness around your concerns. Great feedback has five components – the context, the behaviour, its impact and what needs to be different, and then check for input from the receiver.

Today’s managers and leaders just about need to be psychologists to read people and situations then adapt their approach to suit. It requires a level of curiosity to ask yourself, “do I need to provide management, mentoring, coaching or inspiration?”. The answer to those four components will be a combination of two things – the employee’s skill (ability) and will (attitude). We call this The Skill/Will Matrix (an adaption of Hersey and Blanchard’s original situational leadership model):Managing scenarios in the bottom left quadrant can be tricky. Currently we are seeing a lot of employee-manager and employee-employee conflict in workplaces.

This can be difficult to journey through and needs careful management. The situation is often due to a series of misunderstandings or miscommunications that need to be tabled and unpacked. Using an independent facilitator is a great way to steer discussions towards resolution – it’s always better to not let these scenarios fester to the point where they need an
“ambulance at the bottom of the cliff” response.

It’s important that your front-line people understand the overarching principles of employment law, what can and can’t be said, and which processes need to be followed. A portion of the bottom quadrant may, however, need a more formal course of action.

It is useful to be aware that the processes differ for disciplinary issues (involving misconduct) and issues around performance (involving capability). Be wary of confusing the two. “Misconduct” and “Serious Misconduct” cover multiple things from absenteeism, not following instructions through to bullying and harassment.

These can be extremely sensitive subjects and any workplace investigation may require a Licensed Private Investigator. Licensed PIs ensure full understanding of the required legal processes, mitigate accusations of internal bias and assist employers in making their next decisions. If issues relate to performance, employees must be given sufficient opportunity to improve by way of a PIP (Performance Improvement Plan) with specific actions and timeframes.

Without this in place, employers should not proceed to disciplinary sanctions or exit conversations. Upskilling your leaders and frontline staff to help them provide  the right intervention for their people, be it in leadership, coaching, mentoring or having effective conversations as a manager (even when it’s tricky), will work towards a culture of accountability and clarity in 2023. For assistance with human resources initiatives, including teams, leadership, investigations or facilitated meetings, please contact hr-consulting-hawkesbay@bakertillysr.nz

Top commercial predictions for 2023

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In the last Colliers monthly report of 2022 we provided provide some of our top predictions for the following year and below are the 12 that relate to commercial property on a national scale.

These are not our only projections on the large, complex and ever shifting dynamics of the property sector, so make sure to reach out to get the most relevant and up-to-date advice. Many of the predictions and observations in a Hawke’s Bay context also ring true, and I have covered off these below.

The economy –

1. The RBNZ and economists pick that the peak in the cash rate is getting closer to tackling inflation, but it is still a few months away. While still some opaqueness on timing remains, greater clarity in the ultimate cost of finance is emerging following the latest RBNZ guidance of the OCR peaking at 5.5% in 2023.

2. While challenges lie ahead, the economy will benefit from the boost in demand provided by an increase in the number of overseas tourists, students and workers, facilitated by the reopening of the border and from an easing in supply chain constraints.

Hawke’s Bay has been one of the better performing regions over the last couple of years thanks to our food production sectors, strong retail trade and plenty of local and central government infrastucture projects. We hope apple growers and other food producers aren’t impacted by poor harvest weather, getting high yield crops followed by good export market returns.

Industrial property

3. Record levels of consent issuance point towards some relief for occupiers searching for space, albeit that vacancy rates will remain low by historic standards.

4. Tight market conditions and an inflationary backdrop will see rental levels continue to rise at an elevated pace. Limits, though, will be tested by the ability of businesses to pass on costs to their customers.

5. Owner occupation will become increasingly attractive to businesses looking to insulate themselves from rising rental costs, which will underpin sales activity as investors adopt a more cautious approach given the increasing cost of debt. Industrial land is becoming scarce in Hawke’s Bay. The two major industrial zones of Irongate and Omahu are close to capacity and new land development areas will become more difficult to release due to new National Policy Standards to protect fertile growing land.

Office

6. ESG considerations will become increasingly influential when decisions on office occupation are made. Both governmental, led by government mandates, and corporate occupiers, who are setting their own targets, are looking to limit their environmental impact as we transition to a net carbon zero future.

7. Businesses are likely to provide less remote working flexibility for new and existing employees, but the war for talent will continue. This will add further impetus to leasing demand for well-located, high-grade office space designed for maximum staff engagement, collaboration, innovation and socialisation.

8. While prime grade assets will remain the favoured investment option, a broadening of investor interest will arise as greater clarity on the cost of debt emerges. This will allow a more accurate assessment of the fair value of individual assets based upon the risks and opportunities which they possess. As a result, value add opportunities will become increasingly attractive.

There is no A and little B Grade quality commercial office space across Hastings, Napier and Havelock North. This is a significant issue as Hawke’s Bay continues to be a popular place to establish a business while many local businesses have also grown, requiring more office space. The impact on this will also be felt by tenants as record square metre rates are set. 101 East in Hastings is now at 100% occupancy with Colliers brokering three major lease deals with Westpac, Ask Your Team and Hawke’s Bay Business Hub.

Retail

9. The trend towards mixing experience with product will accelerate as property owners look to broaden the appeal of centres and attract a wider range of consumers to visit more often and stay for longer.

10. Retailers will continue to face operational challenges next year likely resulting in fewer expansion plans and strong discussions during lease negotiations with new and existing landlords. Retail located in prime catchments with a strong omni-channel offering and providing an experience rich in-store offering will continue to remain popular amongst customers, and likely the most profitable.

11. Off-market activity will rise as buyers and sellers negotiate on new benchmark values being formed as a result of new transactions and valuation evidence.

Hastings has undergone a significant makeover with a clear mergence of a hospitality precinct, east of the railway lines and a retail precinct, west of the railway lines. It has attracted some key new businesses into the city, many of which have been brokered by Colliers such as Chemist Warehouse, & Australian retailer Nick Scali. Napier has seen recent retail movements with BNZ relocating as well as Number One Shoe Warehouse both securing new premises on Hastings Street.