Office vacancy at 10-year low
Quake damage is still driving competition for office space in the capital.
Wellington office vacancy has reached a 10-year low, as the squeeze from the Kaiko¯ ura earthquake continues to give landlords the upper hand.
Research from property giant Colliers International found there were only 86,000 square metres of vacant office space available in the city, 6.2 per cent of the total amount of office space.
The managing director of Colliers Wellington, Richard Findlay, said space in the CBD remained tight after the Kaiko¯ ura quake.
Following the earthquake, an estimated 100,000sqm of office space was no longer inhabitable in the capital, including the Statistics New Zealand and Bank of New Zealand buildings on the waterfront.
The availability of prime office space with the highest seismic resilience had become especially tight, Findlay said.
‘‘Prime office vacancy is at 1.2 per cent, with secondary vacancy at 7.6 per cent.’’
Tenants had become very specific in wanting seismically resilient structures, he said.
Colliers executive director Jim Pinson said the low vacancy over the past year and a half and growing demand had helped accelerate the next development cycle.
‘‘Typically, we would have expected a pause in Wellington development activity after the completion of 20 Customhouse Quay and the PwC Centre, but unusual Wellington market dynamics have brought this forward and we see no slowdown for some time.’’
He said the next round of refurbishment and development would provide new space from 2021.
One such project is property developer and investor Newcrest’s office tower that will be built atop the
Z Energy petrol station on Whitmore St.
An area of the waterfront alongside Customhouse Quay, known as Site 9, has also been earmarked by developer Willis
Bond for a new fivestorey commercial office building, serviced apartments, or a boutique hotel.
The number of industrial builds also appeared to be growing, the report said.
In the year to November 2018, the value of the national industrial building consents totalled $1.4 billion – a 16 per cent increase from a year earlier, and the highest since 1991, when the value of industrial consents was first recorded.
In Wellington, $37 million was consented for industrial builds in the year to November, up from $29m in the year before.
In retail, major sales have boosted the value of transactions in 2018, with the total amount of retail space sold for more than $600m in 2018.
The overall value of commercial property sales increased, though the number of transactions declined in 2018 to 34 from 44 in 2017, suggesting investors have larger appetites for higher-end properties, the report said.
Wellington’s Spark Central building, which was sold for $200m in late October to a Queenstown-based investment syndicate, was the most expensive office building ever sold in the capital.
‘‘We see no slowdown [in development activity] for some time.’’ Jim Pinson, above, of Colliers