Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Earthquakes trigger demand for premium Wgtn office space

Earthquakes trigger demand for premium Wellington office space

Last year’s shakes have sent tenants scrambling for space.

After numerous periods showing a softening in demand for commercial property, the latest vacancy survey produced by Jones Lang LaSalle shows that vacancy levels across Wellington’s office market are down to single digits for the first time since early 2011.

Net absorption for the CBD has reached the highest level since December 2007, clarifying another indicator that demonstrates positive market momentum.

Prime stock remains the tightest segment of the office market with tenants showing a clear preference for quality. Grade A vacancy is down 3% from 4.8% to 1.8%. Grade B vacancy has remained flat at 6.4% and Grade C vacancy is down to 12.2% from 16%. In contrast, Grade D vacancy has risen from 14.1% to 15.3%. This suggests office tenants who had previously deferred moving, are now looking to move away from buildings perceived to be earthquake-prone and engaging landlords for higher quality space. Tenants are seeing opportunities to secure property that not only suits their needs but also provides seismic reassurance. Low quality, structurally un-sound buildings will see vacancy rates rise.

In response, Institutions and Investors are focussed on strengthening their buildings rather than new developments. Steve Rodgers, National Director of Office Leasing for Jones Lang LaSalle says, “Major building refurbishments are re-entering the market in the Wellington area including Shamrock House and 142 Wakefield Street. Both of these properties will likely enter the market fully let having been brought up to seismically sound standards”.

Research produced by Jones Lang LaSalle shows that office vacancy over the last six months for Wellington CBD including Thorndon has fallen to 8.4% from 10%. CBD (Core and Frame) has moved down to 9.1% from 11.4%, with Frame leading the way to 6.7% from 8.4% and Core having a significant drop to 12.2% from 15% over the last six months.

A rise in occupier demand has seen decreasing vacancy levels in almost all office suburbs. Thorndon has seen the greatest decrease in vacancy and now sitting at 1.2% compared to 3.8% in the previous six month period. Te Aro is the only precinct which has seen vacancy remain more or less stable with vacancy moving up 10 basis points to 13.9%.

Earthquake prone building policies have had a significant impact on the Wellington office market over the past 12 months and investor confidence had trailed behind Auckland and Christchurch. Justin Kean, Head of Research and Consulting at Jones Lang LaSalle says “Until now there has been very little movement in Wellington, it seems the earthquakes have triggered a burst of letting. The earthquakes have strongly influenced tenants to make decisions and move towards better quality office space.”

Kean continues, “Over the last 18 months the office market has seen supply and demand largely balanced. With some positive occupier demand now beginning to manifest the next 12 months should see landlords able to excerpt pressure on tenants during the negotiation of new leases.

If low grade offices are removed from the market, as expected, the market could swing in favour of landlords or prime and better quality buildings, especially over the short term before any government retrenchment is fully felt in the market.

Jones Lang LaSalle currently survey around 1.2 million square metres of office space in the Thorndon, Harbour Quays, CBD core and Te Aro precincts and the Wellington office continues to expand.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news