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

 


Rental growth patchy in Wellington office market

Media Release
28.08.2014
Rental growth patchy in Wellington office market

Rental returns for commercial property in Wellington are reflecting a two-speed economy – with properties either showing healthy dividends, or struggling, according to latest real estate research data.

Figures just out from Bayleys Research show that a clear rift has emerged between primary and secondary office rates in Wellington.

Bayleys Research senior analyst Ian Little said Wellington’s CBD core for example had performed well above the Thorndon and city fringe precincts by comparison - particularly in the prime office sector containing new or newly–refurbished space.

“The average gross rental rate for central business district offices for example is $550 per square metre. This is an increase of approximately four percent over the last 12 months - and 15 percent higher than average gross rentals achieved in 2007,” Mr Little said.

“Wellington’s city fringe office sector has not fared as well though. There has been a defined downward trend in rental rates. This underpins the ethos that location is one of the leading factors in leasing decisions, and tenants are unwilling to pay the same premium rate for office space outside of those key areas.

“The secondary office market has not fared as well either - particularly outside of the core CBD. In Thorndon, Te Aro, and fringe locations, the secondary rental rate has been trending downward.

“By contrast, secondary offices in the city core experienced a far greater downward correction, from an average of $360 per square metre in 2008 to $265 per square metre in 2011. However, the city core secondary market has recovered quickly since that low point and is now back to an average rental rate of $340 per square metre. “

The Bayleys Research data notes that in Thorndon, the rental market has also remained reasonably flat since 2010. Gross rental rates in the prime office sector of Thorndon have remained stagnant since reaching $450 per square metre in 2010. The precinct is still dominated by Government tenancies, despite their reduced foot print over recent years.

Mr Little said that location likewise remained a key driver of leasing decisions - as shown by the recovery in rental rates in Wellington’s CBD core.

“Equal to location, in terms of what tenants are demanding for office space, is seismic strength and prime quality space,” Mr Little said.

Meanwhile, the Bayleys Research analysis notes that commercial property values in the Wellington office sector have generally been improving since a low point in 2009, following the market retraction as a result of the global financial crisis.

“The total return - which encompasses the return on rental income and the capital gain - for Wellington office investments for the year to March 2014 was 6.6 percent. This annual return has reduced over the last two quarters, but remains well above the total returns which were being achieved in 2009,” Ms Little said.

Bayleys Wellington commercial and industrial director Mark Hourigan said that while the capital’s commercial real estate market was yet to witness any strongly positive capital returns such as those recorded a decade ago, the market had taken heart following the recent sale of Grant Thornton House in Lambton Quay.


© 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