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

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news