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Auckland office rents one of the most resilient across APAC


The five-year outlook for Auckland’s office rents is one of the most positive amongst major APAC cities.

That’s according to the second part of a new research series from Colliers International, titled Asia Pacific Real Estate: Still Good Value in a Changed World.

The first part of the series found low or negative yields on government bonds continue to make property yields more attractive in developed APAC markets.

The second part of the series looked at rent growth prospects in the near and medium terms.

Ian Little, Associate Director of Research at Colliers New Zealand, says office markets throughout Asia Pacific are facing increased vacancy and reduced demand in the short-term.

“Auckland’s market entered lockdown in robust shape with vacancies having dropped to record lows. A softening in conditions was anticipated with a pipeline of development reaching completion in late 2020 into 2021,” says Little.

“We expected this addition to stock to slow rental growth, however the implications of Covid-19 on the economy and work habits will have a more profound effect.

“While we do expect effective rents to decline over the year ahead as landlords are forced to offer higher incentives to attract tenants, this could be relatively short-lived.

“On the positive side, the earlier than expected reopening of large parts of New Zealand’s economy and the robust state of Auckland’s market immediately ahead of the Covid-19 lockdown places the local market amongst a short list of regional cities with the best prospects for post-Covid recovery.

“Our research found only Taipei – and perhaps Tokyo – can expect office rents to stay firm over the remainder of 2020. These office markets, as is the case with Auckland, are supported by low vacancy rates. For most other APAC cities, the outlook for this year looks tough.”

In the medium term, there are much brighter prospects for rent growth in APAC office markets.

“The developed office markets with the strongest rent growth potential over the next five years are Singapore, Melbourne and perhaps Auckland,” says Little.

“Five-year compound rent growth in Auckland is forecast at 2.2 per cent, compared with 1.9 per cent in Sydney and 2.9 per cent in Melbourne.

“By comparison, rent growth in Shanghai and Hong Kong is forecast to fall while Beijing is forecast to remain flat.”

The new Colliers report also looked at Asia Pacific’s industrial markets. It found they will continue to benefit from firm demand, particularly from the logistics sector.

“In Auckland, the industrial sector has long favoured landlords with low vacancy, modest supply and limited access to development land,” says Little.

“The latest Colliers industrial survey showed the vacancy rate was 1.4 per cent, with just 171,000sq m of empty space scattered across the area, and less than 300,000sq m under construction.

“This is well below the level in previous cycles, and should help drive rental growth in the medium-term.

“Five-year compound rent growth in Auckland is forecast at 1.8 per cent, which compares favourably with Sydney and Melbourne at 1.9 and 1.5 per cent respectively.”

John Marasco, Managing Director of Capital Markets and Investment Services at Colliers Australia, commented: “We are seeing firm demand for core office and logistics/industrial sectors, particularly in the key gateway cities of Sydney, Melbourne and Auckland.

“These growth cities are considered future-proof investment destinations with great access to amenities and deep tenant demand in these locations is expected to improve.”

See more office space for lease in Auckland.

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Ian Little

Associate Director | Research


My Colliers partnership priorities focus on supporting the New Zealand franchise network through the provision of research and thought leadership reports, articles and presentations. I draw on over 30 years of experience in the property market, gained in both the UK and New Zealand to my role enabling me to assist a broad range of clients and internal stakeholders. I am a member of the Royal Institution of Chartered surveyors. I am a regular presenter on current market conditions and future trends to the media, clients and various interest groups.

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