Office and retail rents are slipping in Queenstown as 17,303m of new space becomes available in the central business district.
Colliers International Queenstown specialist valuer Geoff McElrea said prime commercial property rentals had "softened".
"They've certainly eased from their heights of the market peak in 2007-08," he said.
Retail rentals had dropped to $900-$1400 a sq m from $1000-$1500 a sq m.
Australian retailers new to the resort, such as surf and clothing brands Ripcurl and Quiksilver, had helped keep demand for space high.
However, "secondary and fringe" retail locations outside the CBD had not been so resilient.
"A number of buildings [are] experiencing long periods of vacancy and weaker rentals primarily because they are located away from the beaten tourist path, plus the additional supply of space available," he said.
There had been a "substantial" increase in commercial developments in central Queenstown over the past two years, with the majority now nearly completed.
He said 17,303m of commercial rental space was being added to the central business district, including 7476m in Ngai Tahu Property's Queenstown Post Office Precinct, 4355m in The Mountaineer, 4052m in the Church St development, 1400m at the corner of Rees and Beach Sts and 260m at the Shotover Street Plaza.
Mr McElrea estimated the building work had cost about $150 million.
"These developments have added to the growing number of high quality buildings within the town but have prompted a softening in both office rents and, to a lesser degree, retail rents," he said.
Landlords were offering leasing incentives to new tenants including contributions towards tenancy fitouts, discounted initial rents or a rent-free period.
Landlords had to be more competitive to attract sustainable tenants in the current economic climate, he said.
The Post Office Precinct is due to open in early October.
Scaffolding was being removed from the building last week.
Tenants include NZ Post, WHK Cook Adam Ward Wilson, Anderson Lloyd Lawyers and the National Bank.
Frankton had also had "significant" new commercial developments and was emerging as a second town centre, Mr McElrea said.
About $25 million had been spent on new developments in Frankton.
"The Remarkables Park has cemented itself as Queenstown's primary large format shopping destination, while a buyer has yet to be announced for Five Mile," he said.
Remarkables Park Ltd director Alastair Porter said he was planning to double the size of the retail shopping park over the next few years.
Mr Porter was "totally confident" the retail space would be filled as it became available.
"We are bringing some more affordable shopping to town at a time when construction workers will be available to do the work," he said.
