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Colliers International has just released their latest Auckland Metropolitan Office Market Indicators report.

Our last Metro report a year ago was headlined ‘Brakes Applied to Metro Market’. Since then the engine has been shifted to neutral and is barely turning over. Almost all proposed developments have been postponed or cancelled. Vacancy overall at 11.2% is a modest 0.6% up from six months ago, very similar to the CBD’s vacancy of 11.5%. Unlike the CBD, the metropolitan areas will have little new supply added this year and what there is largely pre-committed which will enable the metro market to avoid the spike in vacancy anticipated in the CBD this year and next.

However, despite a moribund development environment, there are stirrings in the suburbs. At the lower value end of the market, owners, and their financiers in some cases, are becoming convinced that the slide in values is coming to an end. Owners under pressure to sell are able to find a market, and buyers keen to buy are reasonably confident that their purchases won’t be worth any less at the end of the year. Much of that buying interest is from owner-occupiers and private, more speculative investors, taking advantage of the price discount that can be applied to a vacant property, as a consequence of the high degree of difficulty in leasing office property currently.

Things are still tough for small to medium enterprises, SME’s in the jargon, often wrestling with high stock levels and high debt levels. They tend to be the tenants or owners of metropolitan or suburban offices rather than the larger businesses found in the more expensive CBD precincts. Those with leases expiring this year can expect to be courted by several potential landlords, and quite possibly save significant rent by moving, but they can also expect to have their financial accounts reviewed in some detail before any new landlord commits to a tenancy.

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