Auckland’s metropolitan office vacancy rate has edged downwards due to strong demand for new developments in the city fringe and suburbs, new research from Colliers International has found
The latest Colliers Essentials report found the overall metropolitan office vacancy rate dipped to 6.0 per cent in March 2018, compared with 6.4 per cent a year ago.
Prime office vacancy reduced by 0.8 per cent, to 5.4 per cent.
The figures exclude office properties in Auckland’s CBD, focusing primarily on market activity in the city fringe and suburbs.
Colliers International Research Manager Leo Lee says the findings show the market isn’t out of kilter.
“We are not seeing an oversupply of new metropolitan office coming onto the market. Uptake of new supply has been strong, meaning there are few prime office options available.
“Some of the remaining demand will be met with a healthy supply of new office space, with about 54,700sq m of new prime office space across 12 buildings due for completion in the second half of this year.
“Strong demand means rents are continuing to rise, with city fringe rents in particular continuing to grow from an already strong base. Overall prime metropolitan office rents have increased to an average of $318 per square metre.
“What this all shows is that the market is responding appropriately to demand.”
Matt Lamb, Auckland Leasing Director at Colliers Intentional, says the best new developments are largely pre-leased before completion.
He points to the new Mansons TCLM development at 96 St Georges Bay Road, Parnell, which will be anchored by Xero; Kiwi Property’s Sylvia Park office development, to be anchored by ANZ and IAG; and 33 Broadway, Newmarket, to be anchored by Mercury and Tegel.
“Tenants are increasingly demanding quality new offices with large floor plates, end of trip facilities and excellent environmental credentials,” Lamb says.
“Developers are delivering some impressive new spaces, so we don’t anticipate under current market conditions it will diminish anytime soon, especially among larger corporate tenants.”
Lee says the sales market also remains buoyant, with investors and syndicators continuing to buy quality developments.
Colliers International recently brokered the sale of Goodman Property’s Central Park Corporate Centre in Greenlane for $209 million. The property was purchased by a joint venture led by syndicator Oyster.
Another notable transaction was 96 St Georges Bay Road, which sold for $116 million to syndicator Augusta, representing a yield of 6.5 per cent.