Today, technology is the most important business sector globally, making up 65% of the world’s top 20 public companies by market capitalisation, and Auckland’s “fast-evolving technology ecosystem” is a key part of this growth, according to a recent research report from Colliers.
In New Zealand, the technology industry is rapidly expanding and is currently the country’s third-largest export earner and could become its largest by 2030, according to recent commentary from NZTech.
According to the latest Technology Investment Report, in 2020 the nation’s largest 200 technology companies generated export revenue of USD6.8 billion, with revenue forecast to potentially reach USD11.5 billion by 2030.
Ian Little, associate director of research at Colliers says: “New Zealand’s largest city remains the powerhouse of the technology sector with the tech sector’s growth exerting greater influence over the Auckland CBD’s office market in recent years.
“Auckland hosts the local headquarters of many international technology firms, including Microsoft, Apple, Oracle, IBM, AWS and more recently Google.
“The attractiveness of Auckland as an office location has resulted in technology companies occupying 11% of Auckland CBD’s office stock and 12% of the prime-grade inventory as at December 2020.
“Significant technology clusters have formed within the CBD with leading players showing a strong preference for the city’s northern and waterfront precincts, particularly the Victoria Quarter, Viaduct Harbour and the Wynyard Quarter precincts.
“Wynyard Quarter has been dubbed the city’s Innovation Precinct with technology companies including Datacom, Australasia’s largest homegrown technology company, and American multi-national technology company IBM, that collectively occupy 17% of office space in the precinct.
“Nearby, the Viaduct Harbour precinct houses Microsoft, HP and AT&T which, along with other technology companies, occupy 21% of the precinct’s office space.
“The neighbouring Victoria Quarter precinct has the largest penetration of technology businesses accounting for 30% of all office space occupied by the CBD’s technology firms. The most significant player is Spark, New Zealand’s largest telecoms and digital services company.
“Given the agglomeration of the industry that we have seen, and the development opportunities in these precincts on offer in the future, it is hard to discount the potential for a significant boost in office space demand from the tech industry in the area in the future,” says Little.
The Colliers report also highlights that technology occupiers could account for 20% to 25% of demand for leased office space in the APAC region over the next five years.
Sam Harvey-Jones, Colliers’ Managing Director of Occupier Services, Asia, says: “The technology sector is the key driver of office leasing demand in major APAC cities. While demand from MNC technology occupiers remains important, we expect APAC technology occupiers to predominantly drive demand and shape major office markets over the next five years.”
The report also notes the ongoing expansion of the APAC technology sector creates opportunities for property owners beyond rental growth, as the technology sector increasingly becomes a direct investor in APAC real estate.
Asia’s technology giants, in particular, are expanding quickly, and have become a major driver of leasing demand. Many Asian technology companies, especially Chinese technology firms, have also become very active in investment and development of real estate. In 2020 alone, technology companies acquired nearly US$10 billion in APAC real estate assets, according to the research report findings.