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

 


Auckland office supply puzzle

Auckland office supply puzzle

New research from JLL indicates that it is unlikely the current commercial property supply pipeline in Auckland will oversupply the market. After undertaking analysis of the potential development pipeline for the Auckland CBD and CBD Fringe, JLL have concluded that the current development pipeline is relatively well-matched to the demand profile forecasted over the next ten years. Between 190,000 and 200,000 sqm of office space is likely to be built in
Auckland CBD and Fringe, representing 16% of current supply. Given JLL’s forecast of annual take up, it is expected the supply will take between 9-10 years to be absorbed in the market.

Initial analysis indicated that the potential development pipeline for the CBD is close to 300,000 sqm over the next property cycle. However, as JLL consultant Sarah Dominey suggests, “The market is looking at something considerably less than that actually having a chance of completion over the period; several of the projects are long-term projects and will spill over into the next property cycle or may never make it out of the ground at all.”

Dominey continues “We established that total likely development will take close to ten years to be absorbed by the market. This uncannily matches the typical market cycle for the office market in Auckland, meaning the current development pipeline would likely take us back to about the same level of vacancy, in the same stage of the cycle as we find ourselves today.”

Office development has gained momentum in the Viaduct/Wynyard Quarter precinct and as a result of continued commitment from office occupiers, is portraying a positive outlook for the area. In addition to the Viaduct/Wynyard Quarter precinct, the Western Waterfront (the office precinct including PWC, Zurich House and Britomart) also remains active as one of the main development hubs. Sarah Dominey continues, “There is a definite hub of activity toward the waterfront, we believe this is due to the level of land supply and the resultant lower cost of land and development as well as the fundamental desirability of the location.”

Office space in the upper end of the CBD is suffering through increasing vacancy and soft rents. With the proposed City Rail Link (CRL) targeting the development of three new stations including Aotea Square, JLL believes there is a positive story to be told regarding the fortunes of the upper end of the CBD. This will be unlikely to take effect until 2020/21 at the earliest meaning that it is likely to impact the current supply cycle – rather the next. Consolidated
office areas such as Shortland Street remain should supported as tenants are attracted to the area and there is limited new supply to impact on rents.

After analysing the rental levels required to trigger the development for the different office market segments, JLL predict that it is likely to be a couple of years before market rents will justify a new Premium development in the CBD. Market rents in CBD Fringe areas however are already sufficient to justify new development meaning the CBD Fringe’s market share of new supply is likely to dominate the CBD for the medium term.


Justin Kean, Head of Research at JLL concludes, “Economic rents for Premium space today are unlikely to justify new development on their own merit however our analysis suggests that we are some 10-20% away from this level. Our rental forecasts indicate that the market will hit these rental levels by mid-2016, coinciding with the timing of several new projects set to come out of the ground.”

– ends –

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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