Capital desperate for office space

The first post-quake survey of Wellington office space has found the most acute shortage of space in almost a decade.

Only 7.8 per cent of office space in Wellington’s CBD was vacant last month, down from 10.5 per cent shortly before last year’s quake, according to Colliers International.

It is the first time the vacancy rate has dipped below 10 per cent since December six years ago.

About seven per cent of the city’s office stock is still out of action, most of it due to damage from November’s magnitude 7.8 earthquake.

Steve Maitland, a Wellington office leasing specialist with Colliers, said displaced businesses were still desperate for space, but options were very limited.

‘‘Wellington is full,’’ he said. ‘‘You could put up a sign saying, ‘the inn is closed’ – that’s how constrained the supply is.’’

Patrick Collins, HR manager for OMV, agreed the shortage was ‘‘very frustrating’’.

OMV was forced to leave Deloitte House, which is still under assessment, finding temporary premises in Johnsonville.

In Wellington, the company had had 1400 square metres, more space than its 60-odd staff really needed.

But now they were crammed into about 500 sq m and some staff were working from home.

Collins said they were grateful for their Johnsonville space but were trying to find premises back in the city centre.

’’We have a lot of external meetings as well as internal meetings and it’s just that bit further away.’’

However, OMV’s quest was proving tough.

Maitland said demand for space had come in two waves: The first was immediately after the quake, which had been ‘‘absolute bedlam’’.

‘‘BNZ and Statistics New Zealand alone lost almost 28,000sqm – enough for more than 2000 staff,’’ he said.

Now there was a second wave of demand going on, after Wellington City Council last month ordered more seismic tests on 80 buildings.

‘‘The market has gone into overdrive again, as tenants consider whether to move premises and start weighing up the alternatives,’’ Maitland said.

‘‘They’re all finding out very quickly that there aren’t many options out there – there’s a real lack of large floors and contiguous spaces.’’

The shortage was particularly acute for larger organisations of more than 70 people, requiring 1000sqm or more.

Maitland said demand for the remaining space would ease as new buildings became available within the next year.

A new 14-storey tower at 20 Customhouse Quay, anchored by Deloitte and IAG, is due for completion in late 2017, while the new PWC Centre at 10 Customhouse Quay will be completed by mid2018.

‘‘When those projects are complete, office space will become available in the tenants’ old buildings.’’