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

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news