Competition for prime CBD office space remains fierce

JLL’s latest Vertical Vacancy Review outlines low vacancy rates and strong pre-leasing activity on space scheduled to come to market.

Vacancy in Auckland’s four premium CBD towers (Lumley Centre, PwC Tower, ANZ Centre, and Vero Centre) is 2.6 percent, while the new PwC Tower at Commercial Bay due for completion in April 2020 is already 80 percent committed.

Just under 8 percent of existing prime CBD space is expected to become available as tenants move to newly-built premises, but JLL’s head of Auckland office leasing, Graham Kristiffor, expects this will be absorbed quickly as businesses look to upgrade from secondary stock. “Businesses are increasingly seeing the value rather than the cost of providing high quality office space for their staff, as they consider this a key factor in enhancing engagement,” he says.

“In-building amenities, co-location with complementary businesses and proximity to transport nodes are far more appealing to today’s worker than an available parking space.”

Vacancy is even lower in Wynyard Quarter, with only 1,300sq m of prime office space (0.7 percent) currently available. Furthermore, with 85 percent and 98 percent of space preleased respectively at One55 Fanshawe and Innovation 5B, which are both due for completion next year, Kristiffor says the next significant office space opportunity here will be the 20,000sq m at 136-142 Fanshawe Street, scheduled for completion in 2021.

In Wellington, CBD Grade A space is at even more of a premium with only 1500sq m – 0.5 percent - currently available, and no more space scheduled to be added until 2021 with 20,000sq m at 40/44 Bowen Street.

JLL leasing negotiator Isaac Hunter says that sustained demand in Wellington is driven by a high-level of pre-leasing and the increasing footprint of government departments. “Argosy’s $64 million redevelopment at 8-11 Willis Street is a good example of the Wellington market dynamic,” says Hunter. “This will deliver 11,000sq m of Grade A space by 2021 – which will be taken under a 15-year lease by Stats NZ.”