Positive outlook for office market

JLL’s latest office vacancy rates show demand for office space in the Auckland CBD kept vacancy rates low over the second half of 2016.

Overall, the CBD vacancy rose only marginally from 5.3 per cent to 5.4 per cent.

“In the Core CBD, vacancy levels increased from 5.4 per cent to 5.9 per cent, largely as a result of some surplus capacity in the secondary market,” JLL’s National Research Manager Tom Barclay says.

“B- grade vacancy increased from 4.3 per cent to 7 per cent. There is very little vacant space to speak of at present in Auckland’s premium buildings — the PwC, Lumley, Vero and ANZ towers. However there are some more options becoming available from this year. “Across the Premium and A grade market, the average vacancy level was just 2.1 per cent in December,” Barclay adds.

Wynyard Quarter remains popular, particularly with occupiers looking for larger floorplates. Despite all the new buildings in this area, space has filled quickly and the vacancy rate decreased in the second half of 2016 to reach 3.2 percent in December.

“There are several new A- grade buildings under way, and of course the Commercial Bay tower will open in 2019. It is already prompting a reshuffle of occupiers in the premium buildings, and we expect to see an excess of lower grade office space become available once the dust has settled,” Barclay says.

“Overall the outlook for the Auckland office market remains positive for 2017. We expect Prime office rents will grow over 2017 but will moderate as more options become available. We will see some capacity in the lower A- grade and secondary markets over the next 12 to 18 months, which should take some pressure off rents from the end of the year.”