CBD of­fice over­sup­ply is gone, agents say

The Dominion Post - - Commercial Property - Marta Stee­man

Christchurch no longer has an over­sup­ply of prime CBD of­fice space, real es­tate agents say.

Most of the new of­fice build­ings in the CBD have been leased with pock­ets of va­cant space left to fill.

Col­liers In­ter­na­tional direc­tor of of­fice leas­ing in Christchurch Brynn Bur­rows said smaller ten­ants were look­ing for good deals now that of­fice rents had fallen in Christchurch.

Of­fice rents had been ini­tially north of $400 a square me­tre in the new build­ings and had fallen back to the mid $300s.

Land­lords were pre­pared to of­fer in­cen­tives and be more flex­i­ble over lease terms, he said.

Con­trary to pop­u­lar be­lief there was not a glut of qual­ity CBD of­fice space, Bur­rows said. In­cen­tives be­ing of­fered by land­lords in­cluded cash con­tri­bu­tions to fitout, rent hol­i­day pe­ri­ods and help to pay to ter­mi­nate a lease.

‘‘The city mar­ket is chang­ing. Land­lords ini­tially fo­cused on the large an­chor ten­ants, but they’re now turn­ing their at­ten­tion to fill­ing the fi­nal smaller of­fice va­can­cies in their build­ings.’’

Smaller ten­ants were more price sen­si­tive than ma­jor com­pa­nies but ‘‘prices have come back and they’re be­com­ing more re­al­is­tic for these smaller ten­ants’’, he said.

Build­ings with spa­ces to fill in­cluded Deloitte House, the ANZ Cen­tre, Lich­field Lanes build­ings and the Boxed Quar­ter on the cor­ner of St As­aph and Madras streets.

Prime CBD va­cancy rates in Christchurch had fallen to 5.7 per cent in the Septem­ber quar­ter from 6.8 per cent in the June quar­ter, a re­port by real es­tate firm JLL said.

JLL said that af­ter the com­ple­tion of the Spark build­ing de­vel­op­ment in Cathe­dral Square, ex­pected in 2019, there were no other ma­jor CBD projects sched­uled in the short term.

‘‘We ex­pect space in the CBD will con­tinue to be grad­u­ally taken up, lead­ing to a fur­ther de­cline in va­cancy,’’ a JLL re­view said.

JLL com­mer­cial sales bro­ker Hamish Stall­wor­thy said he did not think Christchurch’s CBD had a glut of of­fice space. The re­build had pro­duced some sharp of­fice build­ings that had leased up well over the past two years.

One of the main ques­tions prospec­tive ten­ants asked when re­turn­ing to the CBD was what car park­ing was avail­able, af­ter they had en­joyed a lot more park­ing space in the sub­urbs.

‘‘Com­ing to a so­lu­tion to that seems to be crit­i­cal in terms of get­ting them to move back into town.’’

Rents across the city were on the de­cline as more of­fice space went on the mar­ket.

IAIN MCGRE­GOR/STUFF

Deloitte House over­look­ing the Avon River in cen­tral Christchurch has a small amount of space left to lease.

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