Office tenants have a far wider range of options available than since 1990 and terms are highly favourable.
Rob Bird, national director of leasing at Colliers International, said that there are plenty of sceptics in the market place, who want to ride things out a bit longer in the belief that bargain-basement deals are going to flow.
But he is adamant that for office tenants, who have been struggling to find premises at affordable rent, the world is now their oyster.
“Many businesses are sitting back thinking that lease deals may get better or that more options may emerge. The reality is that they now have a very wide range of options. The one or two new office developments that will come on stream in the next few years are already known and being marketed.”
Bird said that with no further new developments likely in Auckland for some time, the future supply of stock is effectively capped.
Up to 100,000m² of Auckland office space is becoming available in the next 18 months – but being marketed now. “Most of the owners are very aware of all of the current and future vacant space. They are very focused to secure new tenants.
The current situation is in stark contrast to the past five years when there has been little office space for businesses to choose from, rents have been high, CPI structured rent reviews were common and leasing incentives from landlords were few and far between.
Rob Bird: “The next six months will be the window for companies to lock in the best deals they are likely to achieve in the next property cycle. Smart tenants have already started renegotiating existing leases or negotiating a move to new premises.”
He said the upside of the downturn is that it has weeded out some of the lower quality or less viable speculative developments. In many cases these developments were unlikely to happen but they served to confuse the market place and in some cases resulted in wasted time and money, he said.
“We had one tenant who committed to an Auckland fringe office design build development, only to find out later that the owner could not proceed. They then committed to a second, different development only to have that fall over. Our client has now committed to a new development much closer in on the fringe of the CBD that is well under construction.”
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