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The Wellington CBD vacancy rate increased slightly from 5.9% in Jun-19 to 6.5% in Jun-20. There is just over 90,000 sq m of vacant space. Leasing options within the prime sector remain limited with a vacancy rate of just 0.6%, representing just below 1,900 sq m of space. Secondary vacancy increased to 8.1% the highest since Jun-2018 but well below the 20-year historical average of 10.4%
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New supply under construction will add 48,249 sq m of space to the Wellington Office market, representing approximately 3.5% of the current office stock. However, not all space coming online will be available as over 75% of the space has already been pre-committed.
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Quality developments continue to receive strong tenant interest. Precinct Properties have started construction works on 40 Bowen Street, Stage 2 of the Bowen Campus transformation after receiving 74% tenant pre-commitment from EY and Fujitsu for the 10,500 sq m building.
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Prime gross face rents remained steady over the year for like for like properties. New benchmark rents up to $900 per sq m are expected upon completion of new developments. Current average prime gross face rents sit at $615 per sq m and average secondary rents at $338 per sqm.
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Investor interest in Wellington’s office market remains solid supported by the low interest rate environment and a greater level of overall occupier market stability due to approximately 35% of the CBD’s total office stock occupied by government services. A recent Wellington CBD purchase was Oyster Property Group’s purchase of the government anchored Pastoral House for $77 million from Precinct Properties.
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