Prime vacancy dips in North Shore
The prime office vacancy rate on Auckland’s North Shore has plunged over the last year as occupier demand remains buoyant and competition for investment stock holds steady.
That’s according to Colliers International’s recent North Shore office report, which draws on survey data from the agency’s in-house research team, along with market insights from its North Shore commercial sales and leasing team.
Chris Dibble, research and communications director at Colliers, says the prime vacancy rate for North Shore office space decreased to 2.8 per cent in March 2019, compared with 6.4 per cent a year ago. At the same time, vacancy for secondary buildings increased marginally from 5.2 per cent to 5.6 per cent.
“While space is tight, there is some supply in the pipeline – although competition among occupiers remains strong,” he says.
“One notable development is a substantial new office building at 55 Corinthian Drive, Albany, which is currently under construction.
“The development will add more than 6,000sq m of prime office space, representing 1.6 per cent of the North Shore’s total office supply.
“This will only bring limited relief for occupiers, however, as pre-leasing is likely to absorb a significant amount of space.”
Janet Marshall, Colliers North Shore commercial manager and director, says there is strong competition for office investments. “The investor appetite for well-located, highquality office buildings remains strong, driven by sustained tenant demand for commercial space. Office transaction activity increased by 40 per cent from $129 million in 2017 to $181 million in 2018.”
The Colliers report found average prime yields have firmed by 20 basis points from 6.5 per cent a year ago to 6.2 per cent in June 2019.
One notable recent transaction was the $3.4 million sale of a 959sq m, two-level office building at 1/2A William Pickering Drive, Rosedale. The newly titled freehold property has 41 car parks on a 2,730sq m site. The sale was brokered by Marshall with colleagues Matt Prentice and Shoneet Chand.
Other notable recent transactions include 33 Corinthian Drive, Albany, 62-64 Anzac Street, Takapuna, and 5 The Warehouse Way, Northcote. At the more affordable end of the market, a 183.5sq m office unit at 75J Corinthian Drive, Albany, recently sold with vacant possession for $318,000.
Marshall says office leasing activity also remains strong. Recent deals have included:
• 8 Antares Place, Rosedale – a 1,792sq m office with 75 car parks, leased to BCS New Zealand Limited
• Unit F3, 4 Orbit Drive, Albany – a 368sq m office, leased to Beckoff Automation Limited
• Unit 2B, 2 Fred Thomas Drive, Takapuna – a 500sq m office unit leased in April
• 61 Constellation Drive, Mairangi Bay – a 360sq m office leased in February
• Part level 2, 4 Fred Thomas Drive, Takapuna – a 550sq m office suite leased in February
The Colliers reports found average net face prime rents increased by 3.6 per cent, from $278 per square metre a year ago to $288 per square metre in June 2019.
New-build premises will often achieve rents above $400 per square metre.
Marshall says major infrastructure developments underway in the North Shore will provide strong fundamentals for occupier and investor demand.