Auckland, 3 June 2014 - CBRE New Zealand says its latest research into Auckland’s office sector from the second half of 2013 shows some interesting changes taking place for the local IT sector, with consolidation, expansion and relocation due to growth driving the majority of activity.
With several high profile IT companies such as Orion Health, EROAD and Dimension Data making moves in their property portfolios, the sector’s activity within the Auckland office market is worth making note of.
Gergely Gaspardy, Research Manager CBRE New Zealand says: “There are 208 IT service firms occupying office space in Auckland’s CBD, city fringe and suburban areas, which is a healthy - and growing - figure. Between those 208 firms, the total occupied space is 109,000sqm, which represents 3.5% of all occupied stock in the city.”
Take up of space increases in H2 2013
Total take up of office space by sector, 2013

The IT sector took up 0.1% more space during H2 2013 than it did in H1 (7% take up in H1 compared to 7.1% in H2), says CBRE.
Gaspardy says: “Of note, is the fact that in H2 2013 the Public Sector was in the top five sectors taking up the most new space so the IT sector had the sixth highest take up of new space, rather than the fifth highest like we saw in H1 last year.”
However, Gaspardy makes note that in 2013 as a whole, the IT sector took up 5% of all office stock in Auckland, and was the seventh most active sector with regards to relocations to new space.
High profile IT firms drive activity
CBRE says the largest three moves in H2 2013 were Dimension Data, Orion Health, and rising star EROAD. Gaspardy says there are various reasons behind the IT sector’s take up of new space in the second half of last year: “The key drivers of change we are seeing in the IT sector’s use of space are consolidation, expansion, and relocation due to growth.”
“For example, Dimension Data consolidated several previous office locations to their new HQ in the Viaduct. Similarly, Orion Health took up some additional space on the other side of the road where they have their head office already so expansion was their key driver.
“And then of course, we have EROAD, the rapidly expanding New Zealand transport technology and services company. EROAD recently moved from a space measuring around 600sqm to 1,300sqm due to extremely fast growth in recent months. The company moved within Albany because that is where most of their workforce is based. With a high growth trajectory, it is likely that the business’s space requirements will continue to change rapidly in the coming months and years.”
Suburban areas are top pick for IT sector
CBRE’s research shows that suburban areas are more popular with IT occupiers than the CBD or city fringe. 13% (14,000sqm) of office space is in the CBD core, 27% (29,500sqm) is located in the CBD fringe, and the majority (60% or 65,500sqm) of IT offices are in Auckland’s suburban areas.
Grafton, Greenlane, Albany and Takapuna are the most occupied suburban areas, with some 3,000sqm of Grade A space occupied in Greenlane.
Within the central city, the CBD core is the top spot for IT firms. However, for Grade A office space, the Anzac Ave Zone is leading the way, with the Victoria Quarter and Viaduct Basin Zone offering some very good quality Grade A spaces too.
Gaspardy says that generally speaking, IT companies do not seem to have a strong preference for one particular location, contrary to law firms, the financial sector or the education sector which all have rather clear preferences about locations.
He says: “The location of an IT firm is in many cases determined by the area where most of the company’s workforce lives, as demonstrated by EROAD, or even where the principals of the company live.”
Auckland IT sector office space by area, Q4 2013
Location over quality
Gaspardy says that anecdotally as far as lower quality grade for office space is concerned, IT people are less concerned than other sectors about office grading. There seems to be more of a focus on work place culture and informal incentives such as staff get-togethers and meals.
“While of course there are other organisational factors at play for the IT sector, this attitude towards office grading may be part of the reason why lower quality grade is the majority not only in the sector’s occupied stock but also in their latest demand as we’ve seen in H2 2013.”
Interestingly, says Gaspardy, the majority of IT firms (157) take up between 0 - 500sqm of office space, and only two firms occupy spaces over 5,001sqm.
“Part of the reason that the majority of firms within the IT sector often require less than 500sqm for their offices is that many IT businesses are small to medium in size, and of course the IT sector has a healthy and growing number of start-ups, probably more so than most other sectors.
“When compared to the Public Sector, Finance, and Health organisations which as a rule tend to have more staff and therefore have larger space requirements, it makes sense that the IT sector demand for office space is generally more compact in size.”
IT sector on the up: Market commentary
CBRE says the IT sector as a whole is a healthy and buoyant market, pointing to a recent report from the Ministry of Business, Innovation and Employment (The New Zealand Sectors Report 2013).
Employment figures have been increasing since 2002, and IT salaries are twice the national average - as well as growing faster than the average. Significantly for the property sector, almost half of all IT services invested in expansion in 2012, which indicates an active and growing market.
Highlights of the report:
- Number of IT services firms increased by more than 50% between 2002 and 2012
- Number of employees increased by almost 40% during the same period
- 83% of all IT services jobs are in Auckland, Wellington and Christchurch with 51%, 22.5% and 9.6% respectively
- Wages/salaries in the IT sector are twice the NZ average ($103,563) and growing faster than the national average
- 47% of IT services invested in expansion in 2012. The average rate across New Zealand businesses was 33%
- ROE was 52% in 2011 for IT services, compared to the New Zealand business average of 6.6%
Auckland’s office market
CBRE says Auckland’s total office stock is slightly over 3,000,000sqm, spread across the CBD, CBD fringe, and suburban locations.
Gaspardy says the CBD office market is emerging as the most supply-constrained over the near term, and across Auckland, high levels of confidence and strong positive sentiment are evident. Moreover, latest research shows that Auckland vacancies are dipping below their long-term averages in most sectors of the property market.
“This puts further pressure on existing stock, which is why we are seeing a raft of professional services - such as IT - moving to the suburban areas of Auckland to alleviate some of the higher costs associated with the CBD core.”
Tips for Auckland IT firms
CBRE says the key factors for IT firms large and small to keep in mind over the next 6 - 12 months is that the sector as a whole is growing, which is driving both staffing needs and property requirements for office space. With expansion, consolidation and relocation due to growth influencing many firms property requirements, CBRE advises IT business owners and managers to be aware of the office market, locations and availability, so that if and when the need for new or different space arises, movement can happen quickly, efficiently and with minimal downtime for operations and service delivery.
About CBRE
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.