CBD office oversupply is gone, agents say
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.