Metro office vacancy up due to ‘pockets of vacancies’ in new builds
Recently completed office buildings have created new pockets of vacancies outside of Auckland’s CBD, contributing to a 1.6 percentage point increase in the metropolitan office vacancy rate.
The latest Colliers International metropolitan office survey found overall vacancy increased to 6.7 per cent in September 2018, compared with 5.1 per cent a year ago.
The prime vacancy rate has remained steady, at 5.4 per cent, since the last metropolitan survey in March. The secondary vacancy rate has risen to 7.1 per cent, up from 6.2 per cent in March.
Colliers’ metropolitan office survey excludes properties in Auckland’s CBD, focusing primarily on market activity in the city fringe and suburbs.
Chris Dibble, Director of Research and Communications at Colliers International, says 38,660sq m of new metropolitan office space has been completed in Auckland since the start of the year.
“Pockets of vacancies in these new developments have been the main driver in pushing up the overall vacancy rate,” he says.
“Significant new office developments on Auckland’s city fringe have included 22 Pollen Street in Grey Lynn and the St George Corporate Centre in Parnell.
“In Auckland’s southeast, newly completed office properties have included Kiwi Property’s No.1 Sylvia Park, and Building 6 at Goodman Property’s The Crossing in Highbrook, East Tamaki.”
“Alongside this new build activity, many metropolitan office landlords are upgrading their buildings, especially in the city fringe.
“These newly refurbished buildings are receiving rental premiums and longer lease terms.”
Average prime metropolitan office net face rents have risen by 3.1 per cent in the last year and average prime capital values rose by 8.7 per cent.
Average prime net rents across all of Auckland’s metropolitan office precincts now sit between an average low of $288 per square metre and an average high of $354/sq m.
Average prime yields in the same market have compressed to between an average low of 6.5 per cent and an average high of 7.1 per cent.
Sale activity in Auckland’s metropolitan market remains strong.
In July, 109 Carlton Gore Road in Newmarket sold for $28 million and Oyster Property Group and its joint venture partner, KKR settled the $209 million purchase of Central Park Corporate Centre.
Both transactions were brokered by Colliers International.