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Wellington Retail Report | First Half 2021

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  • Overall vacancy over the second half of 2020 continued its upward trend from December 2019’s low, however, the rate of increase slowed from that evident in the first half of the year. Total vacancy reached 7.6% in December up from the 6.7% recorded in June. The latest figure equates to an additional 1,250 sq m of vacant space, taking the total to 11,000 sq m.
  • The completion of Willis Bond’s redevelopment of the former Farmers Building at 100 Cuba Street was the only significant addition to the CBD’s inventory over the second half of 2020. Removal of stock for refurbishment or earthquake strengthening however, resulted in a net reduction of stock from a mid-year total of 154,505 sq m to 145,170 sq m at the end of the year.
  • A rebound in retail spending has provided strong support to the Wellington region’s retail sector. Total retail spending over the second half of the year totalled $5.2 billion up 21.4% on the figure recorded in the first half of the year and just over 7% on the corresponding period in 2019.
  • Rental values on like-for-like premises held steady over the second half of the year with newly developed space setting the new upper limits. The influence of movement at the upper end saw CBD prime average gross face rents increasing to $1,316/sq m. Rental levels within regional centres were steady over the second half of the year with average gross face rents at $1,075/sq m.
  • Having softened slightly during the lockdown impacted first half of 2020 yield compression was a feature of the market over the second half of the year. Average prime yields for CBD located properties sit at 6.5%. Well located premises benefitting from strong tenant covenants see high levels of competition from investors when brought to market as evidenced by the recent sale of a Kilbirnie property occupied by Farmers at a yield of 6.0%.

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Wellington Retail Report | First Half 2021

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Tim Bowden

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