The Auckland CBD office vacancy rate hit a record low in the latest Colliers International Research occupier survey in December 2019.
The research shows that across the CBD there is now less than 67,000sq m of vacant office space for tenants to consider.
Chris Dibble, Research and Communications Director at Colliers, notes that much of the space is fragmented across the city, leaving a limited amount of choice for tenants that currently need to relocate or expand.
“While prime space is in high demand, the 16,000sq m of higher quality space currently available has resulted in greater enquiry for secondary quality space.
“This has shifted the secondary vacancy rate to a record low 6.3 per cent or just 50,000sq m of space.
“However, we are likely near the bottom of the current vacancy rate cycle with a number of new developments to complete over the next couple of years.
“This will bring new options for tenants, primarily for the space left behind by relocating tenants,” says Dibble.
The long-awaited completion of Precinct Properties’ Commercial Bay tower of 39,000sq m is expected in the first half of 2020.
This will see a significant transition of tenants throughout the city move to the new premium office tower with naming rights to PwC.
Dibble notes that there is currently 86,500sq m of space under construction in five buildings, and pre-commitment rates are at approximately 66 per cent and rising.
“The completion of the buildings under construction over the next couple of years will push the current overall vacancy rate from 5.0 per cent to a forecast 7.7 per cent in mid-2021 when the last premium grade building is expected to complete.”
Adrian Goh, Colliers International Research Analyst, notes that private and listed company developers are considering their options in this low-vacancy, strong occupier demand environment.
“There are a number of proposed office developments with no confirmed timelines and tenant pre-commitment yet. However, discussions between developers, prospective tenants and agents are underway to see what can be unlocked.
“Our analysis of the potential development pipeline shows that the total floor space of these proposed premises is 133,000sq m across nine projects.
“Major tenants in existing buildings with expiries in 2023 to 2025 are being chased to meet pre-commitment thresholds.
“While we expect to see these long-term discussions continue, many will be mindful about the background of some uncertainty in economic conditions at the moment.“This may moderate some of the proposed development pipeline which would moderate future increases in vacancy rates once more stable economic conditions re-emerge,” says Goh.