Wellington CBD office vacancy rate dips to record post-quake low

20 Customhouse Quay, Wellington

Vacancy dips to 7.4 per cent, down from 10.5 per cent pre-quake

Wellington’s acute shortage of CBD office space has only worsened in the year since the November 2016 quake, new figures show.

Colliers International’s latest monthly New Zealand Research Report, released today, found office vacancy rates are continuing to dip to record lows, particularly in the prime sector.

Research Manager Leo Lee says the December 2017 survey found office vacancy in Wellington’s CBD fell to 7.4 per cent – down from 10.5 per cent in November 2016, shortly before the quake.

“Demand pressures continue to grow since the loss of nearly 100,000sq m of office space since November 2016,” Lee says.

“There is little relief in the prime sector, with less than 300sq m, or just 0.1 per cent, of prime space available.”

Lee says Wellington’s secondary vacancy rate has also dipped by 3.3 per cent, with only 103,147sq m (9.1 per cent) of secondary stock available now compared with a year ago.

Lee questions whether new office supply in Wellington this year will be able to alleviate some of the demand pressures.

“The completion of new office developments in Wellington last year totalled 38,800sq m. One of the largest additions was the new Transpower building at 22 Boulcott Street (8,440sq m), which allowed the tenant to consolidate two office locations.

“However, the new stock has done very little to alleviate demand, and vacancy is unlikely to lift anytime soon.

“While both 20 Customhouse Quay and the new PwC Centre are expected to be completed by mid-year, almost all of their 26,400sq m of new office space has been pre-committed.”

Lee says Wellington’s low office vacancy rates have seen average prime gross face rents increase 3.9 per cent in the year to December 2017.

“It’s certainly a great time to be a landlord in the prime office market in Wellington,” he says.

“That sentiment is reflected in Colliers International’s latest quarterly investor confidence survey, which found Wellington was the only main centre to record an improvement in office investor confidence.”

In Auckland’s CBD, office vacancy increased 0.7 per cent to 5.9 per cent overall in December 2017, but continues to remain low. It has not exceeded 6 per cent since the middle of 2015.

The latest increase stems mostly from more prime stock becoming available in Viaduct Harbour and Victoria Quarter.

The next two years will see close to 60,000sq m completed over three projects, but vacancy will remain tight over this period.

Vocus House on Sale Street is set to be completed this quarter, while the majority of new office supply is set to arrive in Q3 2019. PwC Tower in Commercial Bay makes up over half (39,000sq m), while One 55 Fanshawe, to be constructed on the ex-Caltex site by Mansons TCLM, is expected to contribute 15,000sq m.

 

 


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Chris Dibble

National Director | Colliers Partnerships, Research & Communications

Auckland CBD

My Colliers Partnership priorities focus on support initiatives that drive collaboration, best practice learning, cost efficiencies and growth opportunities across the wider Colliers International New Zealand franchise network. I also oversee the collaboration and delivery of award-winning research reports and communications for Colliers. With over 13 years of experience and university qualifications in economics, geography, marketing and property. I have a multi-disciplinary approach that assists a broad range of clients and internal stakeholders. I am a regular presenter and market commentator, often discussing the latest insights on current and future property trends. I also work with in-house and external writers to curate an audience-focused content delivery strategy for Colliers.

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