Colliers research shows improving Auckland retail and office sectors
Auckland's CBD is experiencing a welcome post-Covid rebound as highlighted by recent data releases from the Colliers Research team.
The city's retail and office property sectors are witnessing a lift in tenant demand, driven by factors such as population growth, greater tourism numbers, and the return of staff to offices.
The latest Colliers Research reports underscore the notable improvements in the retail sector.
Despite facing several challenges, Auckland's CBD has witnessed a rise in retail leasing activity.
CBD strip retail vacancy rates have decreased to 10.4 per cent as of December 2023, marking a significant drop from the peak level of 14.4 per cent recorded in December 2021.
While vacancy remains above levels apparent before the Covid-19 pandemic, vacancy has now fallen in four successive six-monthly surveys.
Ian Little, associate director of research at Colliers, says the positive trends observed in Auckland's CBD reflect a promising recovery phase, showcasing improving fundamentals in both the retail and office markets.
“Leasing activity in the retail sector has been driven by a combination of new entrants and established brands seizing opportunities to relocate to more prominent locations,” Little says.
“Noteworthy additions to the Auckland CBD market include luxury brands like Van Cleef & Arpels at 22 Queen St and Cristian Louboutin at 34 Queen St. Furthermore, brands like Unichem and JB Hi-Fi have strategically repositioned themselves, contributing to the overall vibrancy of the retail landscape.”
The attractiveness of the CBD to retailers has been further bolstered by increased foot traffic. Pedestrian traffic counts have shown a substantial rebound, with figures from Heart of the City showing a 32 per cent increase in foot traffic in the CBD in 2023 compared to 2022.
This trend has gained momentum, with an 18 per cent increase in the final quarter of 2023, compared with the same period in 2022, which saw foot traffic reaching 78 per cent of pre-pandemic levels recorded in the December quarter of 2019.
In parallel, the office sector in Auckland s CBD has also witnessed a decline in vacancy rates, particularly in high-quality premises with strong environmental credentials.
Colliers’ latest vacancy survey reveals an overall vacancy rate of 12.2 per cent in December 2023, down from 12.9 per cent previously. The prime grade sector saw a notable reduction in vacancy from 8.3 per cent to 6.8 per cent over the course of 2023.
Chris Dibble, director of strategic advisory at Colliers, says businesses are increasingly prioritising highgrade office spaces located in amenity-rich areas as they seek to attract back to the office.
“Premium grade office spaces have seen a surge in demand, with vacancy rates reaching as low as 0.3 per cent as of December 2023, a significant decrease from the 6.2 per cent recorded in late 2020,” Dibble says. “One of the standout examples of this trend is Spark's decision to move its staff to their new headquarters at Fifty Albert, showcasing the appeal of premiumgrade spaces in revitalised CBD environments.”