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


Tenants want better in Auckland metropolitan office market

Colliers International Research’s latest annual review of the Auckland metropolitan office market shows a busy year of activity with ongoing occupier demand for higher quality spaces leading to the construction of new buildings and refurbishment of existing premises.

Chris Dibble, Research and Communications Director at Colliers, notes that solid occupier demand with a reduction in overall vacancy to 5.6 per cent and prime vacancy at just 3.3 per cent provides the detail in how tenants searching for quality space are driving the market forward.

“Landlords want the best companies, companies want the best staff, staff want the best working environments. For this flow-on-effect to work best, landlords need to assist with the delivery of better workspaces,” says Dibble.

Occupier demand for higher-quality premises has led to over 25,000sq m of office stock removed from the Colliers International metropolitan office survey in 2019 for refurbishment works.

One example is the 107 Carlton Gore Road refurbishment by Argosy who is targeting a green star rating for incoming tenant Housing New Zealand Corporation.

Dibble says the flight to quality phenomenon is not new, but it has changed and been accentuated by the proliferation of coworking, serviced offices and other SME-centric leasing models that provide a new look and feel on how people work.

“There are the proven productivity and staff retention and attraction benefits of the new modern way of working.

“There is also the rise in social media and having ‘Instagrammable’ office space that can make the difference in today’s leasing environment.

“Having the blend of these conditions is a key differentiator when it comes to marketing space,” says Dibble.

The rising quality of space has an associated cost, but it is also the limited space and steady employment provide the impetus for metropolitan office average net face rents to continue rising.

While low and average net face prime rents now sit at $325/sq m and secondary at $215/sq m, often rates sit well above these levels, especially for the most desired space across the city.

From an investment perspective, Gareth Fraser, Auckland Director of Investment Sales at Colliers International notes that lower interest rate expectations are driving investor demand.

“We have had a record year, with experienced investors and new entrants looking to take advantage of the positive market conditions.

“Many are turning to commercial property due to less government regulatory focus as arising in the residential sector. Also the comparably low returns offered by traditional savings methods such as term deposits is another factor driving activity,” Gareth says.

Average yield compression for the 12-months to September 2019 was 60 basis points to 6.2 per cent for prime office stock and 70 basis points to 7.1 per cent for secondary office stock.

Gareth notes that investment opportunities are becoming more difficult to source at these yields with softer yields typically a result of more complex issues that need to be resolved.

“High quality, sought-after property is generating significant enquiry and selling fast. We have had a very successful year with properties being taken to auction as well, with clearance rates just below 80 per cent.

“We view sales activity this year at record highs and competition is strong for quality assets. Private investors, owner-occupiers and syndication companies are the most active,” says Fraser.

Some recent high-profile metropolitan office sales this year include Stride Property Group settling on the ASB Bank tenanted property at 33 Corinthian Drive. Property and Funds Manager Oyster Management purchased the property for $50.5 million representing a yield of 5.88 per cent. Settled in August this year, a local private investor sold 57 Market Road for $11.6 million to an Australian-based investor representing a yield of 5.78 per cent.

© Scoop Media

Business Headlines | Sci-Tech Headlines


The Narrow Divide: New Poll Shows Tight Political Race For SME Votes

In a major turnaround following nearly a decade of MYOB election polls, Labour is currently the preferred political party of New Zealand’s SMEs, with 38% of SME owners and decision makers intending to vote red in the upcoming General Election, ... More>>

Reserve Bank: Further Easing In Monetary Policy Delivered

Tēnā koutou katoa, welcome all. The Monetary Policy Committee agreed to expand the Large Scale Asset Purchase (LSAP) programme up to $100 billion so as to further lower retail interest rates in order to achieve its remit. The eligible assets remain ... More>>

Retail: Post-Lockdown Retail Card Spending Picks Up

The rise in retail card spending was boosted by sales of furniture, hardware, and appliances, Stats NZ said today. “For a third consecutive month, card spending on the long-lasting goods (durables) remained at higher levels than last year, after ... More>>

Contact: Business Drops, New Generation On Hold

New Zealand’s second-largest energy company Contact Energy (‘Contact’) released its full year financial results for the 12 months to 30 June 2020 (‘FY20’) this morning. More>>

Mining: OceanaGold Announces Receipt Of WKP Mining Permit

MELBOURNE, Australia, Aug. 6, 2020 /CNW/ - OceanaGold Corporation (TSX: OGC) (ASX: OGC) (the 'Company') is pleased to announce it has received the mining permit for Wharekirauponga ('WKP') on the North Island of New Zealand. ... More>>


Economy: COVID-19 Lockdown Has Widespread Effects On Labour Market

In the June 2020 quarter, the seasonally adjusted unemployment rate fell to 4.0 percent, down from 4.2 percent last quarter, while underutilisation rose, Stats NZ said today. More>>


NZ Post: New Research By NZ Post Shows Online Shopping Grew 105% In Alert Level 3

New research by NZ Post into how the COVID-19 response has impacted the way Kiwis shop online, shows online shopping increased 105%* when the country moved into Alert Level 3, and may have changed the way Kiwis shop permanently. Online spend peaked ... More>>


Antarctica NZ: Ice-Olation

Antarctica New Zealand is gearing up for a much reduced season on the ice this year and a very different deployment to normal! Before they head to one of the remotest places on the planet, all personnel flying south with the New Zealand programme will ... More>>


QV Valuations: July House Price Index Illustrates Market Resilience

According to the July 2020 QV House Price Index (HPI) results out today , property values recorded a marginal increase, up 0.2% over the month. This is somewhat of a turnaround from June, after the national index edged 0.2% lower. More>>


Property: Queenstown Rents Experience Biggest Drop In Seven Years

Rental prices in the Queenstown-Lakes district saw the biggest annual percentage drop in seven years after falling 28 per cent on June last year, according to the latest Trade Me Rental Price Index. Trade Me Property spokesperson Aaron Clancy said ... More>>

Seismology: The Quiet Earth

As many daily activities came to a halt during lockdown, the Earth itself became quiet, probably quieter than it has been since humans developed the technology to listen in. Seismologists have analysed datasets from more than 300 international ... More>>

RNZ: James Shaw Says Kiwibank, Not Ministers Should Decide On Investors

Climate Change Minister James Shaw says Kiwibank's decision to stop doing business with companies dealing in fossil fuels is the right one. More>>


FMA: Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments

Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually ... More>>

FIRST Union: Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off

(FIRST Union comments on The Warehouse consultation and proposed restructure) 'Unfortunately the Warehouse have done the disappointing thing and used Covid-19 to justify a bunch of operational business decisions that will leave hundreds of workers without jobs ... More>>