Auckland CBD office rents rising despite supply pressures easing

Prime vacancy rate at 4.3 per cent, up from 2.8 per cent a year earlier

Auckland CBD office rents are continuing to climb despite supply pressures easing slightly over the last year, new research shows.

Colliers International’s Auckland CBD Office Market Snapshot, released today, shows the overall CBD office vacancy rate remains low, at 5.9 per cent.

Research and Consulting National Director Alan McMahon says the prime vacancy rate is 4.3 per cent, up from 2.8 per cent a year earlier, while the secondary vacancy rate is 7.0 per cent, up from 6.7 per cent.

Colliers’ projections show the prime vacancy rate is expected to drop to a low of 3.1 per cent in June 2019, before peaking in December 2020 at 6.0 per cent.

McMahon says despite supply pressures easing slightly, there is still a lack of options available for tenants in the market.

“This will accelerate rental growth upwards in the short term. Growth will moderate in 2019-20 when more supply arrives, but will still be positive.”

Net prime CBD office rents are at an average of $471 per square metre, up from $444/sq m a year earlier. 
Secondary rents are at an average of $264/sq m, up from $253/sq m.

McMahon says Auckland’s strong growth continues to attract investment interest from offshore, with further yield compression expected.

“Prime yields are at 6.5 per cent, down from 6.8 per cent a year ago, while secondary yields are at 7.6 per cent, down 8.1 per cent.”

McMahon presented the latest office research results to a 300-strong audience at the first Colliers Research Meets the Road event of 2018, which was held at the Pullman Hotel in Auckland this morning.

The guest speaker, Housing and Transport Minister Phil Twyford, spoke to theme of Releasing Auckland’s Potential.

McMahon says the office research is the first in the new Colliers Essentials series, which aims to present the latest research findings in a timely, easy-to-digest, graphic-rich format.

The single-page format is more up-to-the-minute than Colliers’ previous multi-page reports, which took longer to produce. It is also digital-only, ensuring it is more sustainable than previously printed reports.

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