Record low in Christchurch office, retail vacancy
Dwindling office and retail vacancies in the Christchurch CBD augurs well for a possible new round of property developments.
Gary Sellars, director of valuation and advisory services at Colliers Christchurch, tips growing demand will entice developers who have been waiting in the wings.
“We think that the record shortage of space now available in the inner city could well encourage some new builds. There’s now only 9.7 per cent vacancy in CBD office space – the lowest recorded since Colliers began surveying the market in 1993.”
The findings were released in Colliers’ annual Property Council NZ Christchurch Annual Market Summit (there was no survey last year because of Covid-19 disruptions).
Sellars says there is no corporate office space 350sq m or larger available in the CBD’s inner core, which covers the retail precinct to Cathedral Square. Only 270sq m of new office space is under construction in the wider inner city.
The survey identifies 13 inner-city sites that could be ripe for development.
“Those who already own CBD land are in a good position to build. Even though the build costs and interest rates are rising, owners will be encouraged by increasing office rents, which are on the move for the first time in seven years, coupled with strong demand from tenants.”
Office vacancy is also diminishing in the suburbs. Burnside and Russley are proving especially popular, together with inner Addington where leasing options are limited in preferred locations.
Retail space in the inner city is in demand, with only one store available for lease on the fringe of the Cashel St precinct. Vacancy in the wider CBD has halved since 2020 to just 6.1 per cent.
“With significant occupancy improvement in the past 18 months, and all the major current developments completed, there’s keen interest in the proposed new development beside Westpac in Cashel St.”
Marius Ogg, investment sales broker at Colliers Christchurch, says the investment property market has been extremely strong with several substantial sales over the past nine months.
“After one of the strongest markets experienced in recent times, we are now entering a new phase of the property cycle, with the impact of rising interest rates and rampant inflation causing some parties to take stock of their positions. That said, there’s increasing acceptance of where the market currently sits with plenty of transactions still being completed.”