Light at end of city rail tunnel: Bayleys
Major infrastructure works have been disrupting Auckland’s Midtown and Upper Queen St for an extended period — and the lingering preference to ‘work from home’ post-pandemic is still impacting occupancy in parts of the city’s office market.
Yet the Auckland CBD has shown commendable economic growth over the same period, and as key office redevelopment projects advance in the Midtown precinct, there is light at the end of the tunnel for office owners and occupiers, Bayleys Commercial says.
The latest data from Infometrics reveals Auckland’s CBD outperformed the rest of New Zealand in both GDP and employment growth for the second year in a row, cementing its position as the country’s economic epicentre.
The CBD’s economic growth rose to 9.2 per cent, reaching a valuation of $30.4 billion up to March 2023. This was accompanied by a 7.3 per cent annual increase in employment, contrasting with the national average of 2.5 per cent.
Steve Rendall, Bayleys’ national head of occupier strategy and solutions, said a number of urban renewal projects that align with completion of the City Rail Link (CRL) project are progressing.
While there will be ongoing interruption to traffic, pedestrians and retailing for at least two more years, the end is in sight.
“Access to parts of Midtown and around Upper Queen St during the CRL works has been testing, with Upper Albert St particularly affected, and access to surrounding amenities, retail and office premises has been problematic.
“However, we can now see the light at the end of the tunnel (so to speak). From a commercial real estate perspective, we anticipate there will be appreciable upside and opportunity for owners and occupiers in the Midtown and Uptown commercial precincts, as the CRL and associated stations are completed.”
Rendall said the university, Midtown and Uptown precincts have generally under-performed in terms of property values, occupancy levels and rental rates since the pandemic and ongoing infrastructural works.
“This has been driven by a number of factors including a downturn in international student numbers, a general reluctance of office workers to return to the office, and hesitance by employers to require staff attendance.
“There’s also been significant disruption to public transport, vehicle traffic and pedestrian flows – particularly around Victoria St, Albert St, Wellesley St and Mayoral Drive with routes closed and access restricted.
“Additionally, there have been associated safety concerns and a general lack of amenity due to many retail outlets and hospitality businesses closing out of sheer frustration and/or lack of turnover.”
Rendall says although latest estimates put the CRL project around 80 per cent complete, pointing to a late 2025-26 handover to Auckland Transport, he’s witnessing a surge in property inquiry and activity in parts of the CBD that have languished in recent years. This has been helped by some exciting new investment in these areas.
“Public and private investment will help deliver a resilient and future-driven mid-to-upper city with tangible advantages for office users, residents, visitors, and the economy as a whole.
“Examples include Malaysian Resources Corporation Berhad’s refurbishment of Bledisloe House and planned new development at the Symphony Centre, Auckland Real Estate Trust’s launch of the Formery East and Formery West, and the evolution of the SkyCity precinct as the new International Convention Centre (ICC) moves closer to completion.”
Work is underway on The Symphony Centre, a 21-storey over-station development with integrated access to Te Waihorotiu station in Wellesley St incorporating retail, commercial offices and high-density residential development. Existing Bledisloe House is also being refurbished and upcycled with cosmopolitan laneway connectivity.
AT has not committed to a date when trains will start running on the CRL, but it will not happen before mid-2026. Full report: oneroof.co.nz