Colliers International boss Mark Synnott says the current upturn is the strongest he's seen in 27 years

The head of this country's largest commercial real estate agency believes commercial property's bull run could continue for another three years.

In a Double Shot interview with interest.co.nz, Mark Synnott, the chief executive of Collier International's New Zealand arm, said the current market upturn was the strongest and most sustainable he had experienced in his 27 years in the industry.

"Between the late 80s and the mid-90s it was really tough. Way, way tougher than the GFC (global financial crisis)," he said.

"We started to come out of that toward the late 90s and then we hit the Asian crisis.

"Then we had that rush of blood to the head in the mid-2000s and then we've gone through the GFC.

"But this is the strongest period of sustainable growth. The growth we had in the early to mid-2000s wasn't sustainable," he said.

That was showing up in Colliers' revenue figures, which hit an all time high of $71.5 million last year, and this year was shaping up to be even bigger, with revenue so far this year running 17% ahead of the same period last year.

A key factor for investors was was that yields on good commercial properties were still higher than bank deposit rates.

The investors buying into the market were either local high net worth individuals, or overseas investors, mainly from Asia, who were a mix of corporate investors and wealthy individuals.

A notable feature of the market was that Asian investors had now largely replaced corporate Australian investors as the main overseas buyers of commercial properties in this country, he said. 

Synnott said Colliers had recently sold the former Auckland Star Building site on Auckland's Fort St for around $28 million to some Chinese investors.

The buyers were a relatively young Chinese investor and his cousin, who would likely redevelop the site, which is currently a car park, into a mixed use complex, possibly a hotel and offices or a hotel and apartments.

Many of the locals who were buying commercial property were business people who were approaching retirement age and didn't want to reinvest into another business.

Commercial property provided a sustainable cash flow and allowed them to put their feet up a bit, he said.

However there were signs the market could be peaking.

"It's not too topped out but we don't think it's got anywhere to go now," Synnott said.

"We are hoping we'll have a strong steady market for the next three years.

"But inevitably there will be a correction and that usually happens at the end of a decade."

Some businesses that owned their own premises were starting to sell their properties to release capital, particularly if they bought at low prices in the aftermath of the GFC.

"Some are doing sale and leasebacks. It's a good time to get their capital out and put it back into their business where they'll get a higher return," he said.