Auckland CBD Office Report | Second Half 2020

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  • Vacancy increased from its cyclical low, reflecting the impact of COVID-19 and the introduction of new supply. The overall vacancy rate reached 6.3% in our latest Jun-20 survey, up from the 20-year record-low of 4.7% recorded just six months prior. Prime vacancy increased from 2.5% in Dec-19 to 3.5% in Jun-20. Secondary space experienced a greater rate of increase from 6.3% in Dec-19 to 8.5% in Jun-20.

  • The completion of Precinct’s new PwC Tower in July has added 39,000 sq m of premium office space to the Auckland CBD market. Approximately 42,355 sq m of prime stock is currently under construction and expected to be added by Jun-21.

  • The impact of COVID-19 and changes to workplace strategies from some firms are leading to a rise in sublease opportunities. There is currently around 30,000 sqm of sublease space available in the CBD with an area of 1,000 sqm or more.

  • Average net face prime rents increased modestly from a year ago, now ranging between $422 and $542 per sq m. Average net face secondary rents increased by around 3% to range between $255 and $327 per sq m. The completion of new office space will see new benchmark rents recorded with face rents reaching almost $800 per sq m in some instances. This is providing a wide variation in rents achievable across the market. Landlords are reacting to changing conditions with increases in vacancy and softer economic conditions leading  to an increase in incentives, particularly for secondary space.

  • Average prime and secondary Investment yields have softened slightly in response to the disruption created by COVID-19 but are expected to firm, supported by a low interest rate environment. A recent Colliers International APAC office research report highlighted Auckland as a highly attractive location for investors due to the highest debt to yield spreads across the APAC region.

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Auckland CBD Office Report | Second Half 2020

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