- Overall vacancy within Auckland’s Metropolitan Office market rose to 6.3%, up from the 5.6% recorded 12 months prior, but still well below the 20-year average of 8.4%. Occupier interest and demand in prime quality office space remains elevated which has resulted in vacancy within the Prime sector remaining largely unchanged at 3.3%. Vacancy within the secondary sector increased from 6.3% in September 2019 to 7.3%.
- There is approximately 51,219 sq m of office space under construction or refurbishment, representing just over 3.0% of the total current stock. Over half of the pipeline is only expected to be completed by 2022. 60,200 sq m of office space has been consented but progression to the development stage will, in most cases, be dependent upon securing appropriate tenant commitment. The deferment of these projects will help to soften increases in vacancy levels in the coming year.
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A number of large tenant movements are imminent as new CBD office buildings are completed. Notable movements include Genesis Energy’s shift from Central Park to 155 Fanshawe Street. Fidelity Life and 2 Degrees will move from the Newmarket precinct to 136 Fanshawe Street when the building completes in 2021.
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Average prime net face rents have held steady over the year at $331 per sq m and average secondary net face rents at $218 per sq m. Incentives are on the rise but are being tempered in negotiations for shorter and more flexible leasing terms. Average incentives have increased to approximately 14.1%.
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The current record low interest rate environment, which is likely to persist for some time, provides strong support for investment activity. Notable recent transactions include an office building at 22 Amersham Way, Manukau which sold for $11.0 million reflecting a yield of 6.44% and a data centre at 15 Lambie Drive to a private investor which transacted for $12.0 million representing a 6.1% yield.
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