The overall metropolitan office vacancy rate increased to 6.4% in March 2019, compared to 6.0% a year ago. However, vacancy for prime buildings decreased from 5.4 % to 4.8%.
There is just under 40,000 sqm of office space under construction in the Auckland metropolitan market, representing 2.3% of current total stock.
The average prime metropolitan office net face rent increased by 3.6% in the last year. The average prime investment yield firmed by 56 basis points. This has led to the average prime capital value rising by 12.5%.
Competition remains high for metropolitan office properties, driving up prices. There was a 2% increase in total sales value in 2018 compared to 2017 despite total sales volumes decreasing by 13% over the same period.
Prime average yields across metropolitan Auckland range between 6.3% and 6.9%, however, there are a number of properties selling for sub-6% yields, depending on location, tenant covenant and price range. Due to low interest rates and high levels of competition, we expect yields to remain firm.