Capacity bulge likely just a blip
Office vacancy in the Wynyard Quarter — Auckland City’s desired waterfront strip — has jumped for the first time since 2001. But far from this being a sign that tenants are tiring of surveying the city’s beautiful harbour, JLL research indicates it’s probably a blip.
Space permitting, the migration of leading firms from CBD to Wynyard Quarter buildings is only likely to accelerate in the next few years, according to JLL.
The findings from a December 2017 survey, indicated a divergence in vacancy rates, with the CBD sitting on 6 per cent vacancy while the Wynyard Quarter jumped to 8.1 per cent.
But associate director of research Tom Barclay puts this down to new stock coming to market with the Wynyard Quarter, plus tenant relocations, such as Bayleys, within the precinct.
“Given the popularity of Wynyard Quarter with occupiers over the past few years, we don’t expect this trend to continue,” says Barclay.
“In all likelihood, the precinct will continue to draw larger floor plate occupiers, like the AA, out of the core CBD. Future pipeline development has the potential to draw another tranche of major occupiers down into the area.”
Despite the new options that have come into play, the occupier market has so far had the ability to absorb additions he says.
Net absorption (the increase in total occupied stock) reached 27,000sqm in the six months to December, one of the highest counts since the GFC.
“In terms of development some
29,000sq m of new and refurbished office stock was added to the Auckland CBD market in the second half of 2017 including Precinct Properties new building on Madden St in Wynyard Quarter. There were also two refurbishment projects completed including the former Vodafone Building, now occupied by Auckland Transport, and 82 Wyndham St, the new headquarters for Panuku. The occupier drift to Wynyard and the waterfront continues with the opening of 46 Sale Street (AA Insurance House) around the corner. PAG Asia bought this property early last year and the AA, who are leaving their premises at 99 Albert Street, will be the anchor tenant.
“Over the past five years we are have seen a number of larger corporates move to new premises in the Wynyard Quarter area.
“Many have outgrown their existing CBD premises and are looking for large floor plate space that can house more staff on one level, rather than being split over multiple levels in potentially outmoded CBD buildings,” says Barclay.
“When we look at the basket of premium and grade-A buildings in the CBD, the typical floor plate is around
1000sqm, compared to the grade-A Wynyard basket where the typical floor plate is closer to 2,000sq m.
“This development has been tenant driven so there been an obvious attraction for larger corporates in adopting the campus-style set up,” he says.