Demand set to be high for new, productive space after years of diminishing options
125 Queen Street (left) and 46 Sale Street (right)
Auckland, 14 May 2016 - 80,000sqm of high quality office space is becoming available in the Auckland CBD office market over the next 18 months after near-decade-low space shortages, according to CBRE New Zealand’s latest Auckland Office Occupier MarketView.
The research report highlights that:
- There have been no new additions to the CBD Prime quality stock for two consecutive years before the new NZME Building at 2 Graham Street was completed in November 2015.
- The combination of lack of new options and existing occupier demand saw Prime quality vacancy decrease to 1.4% by the end of last year, the lowest figure since December 2007.
- In the next 18 months or so, about 60,000sqm of prime office space will become available in the CBD market in the form of completed new developments and major refurbishments. This is supplemented by an additional 20,000sqm of good quality backfill space that relocating occupiers leave behind.
Gergely Gaspardy, Research Manager at CBRE New Zealand, says that the new supply will generate more options and occupier activity, as occupiers have been starved of options over recent years.
“Although the word ‘shortage’ in connection with the Auckland property market has most often been used to describe the residential sector in recent years, Prime quality office accommodation in the CBD could have easily been characterised by the same term.
“The completion of the NZME Building late last year signalled a change in the trend and added 18,000sqm of new office space to the market. Strong occupier demand for high quality space is underpinned by the fact that upon completion, all but one level of the new building have been absorbed by occupiers.”
Gaspardy says that although the amount of supply will increase Prime quality vacancy in the short term, CBRE expects strong occupier demand for the majority of the new options.
“There are a number of reasons why we believe that demand for most of the new space will be high among occupiers. Firstly, many of the new options are located either at the Waterfront or in the Core CBD, two areas that occupiers identified as the most suitable office locations.
“Secondly, about 60% of occupiers prefer Prime quality space even when the price of the space is taken into account, and, thirdly, the new options offer a wide range of accommodation types to occupiers. These include a high-rise tower in the Core, large floorplate campus-style buildings in the fringes, to buildings that adopt the latest workspace trends of combining core office space with more flexible co-working space.
“Most importantly though, we think that there will be more occupier activity because relocating to better quality premises increases staff productivity and helps to attract and retain top talent.”
Gaspardy says that although objectively measuring the change in productivity in an office environment can be challenging, the results of various research projects on the subject show that subjective measures such as employee surveys can provide sufficient evidence that the quality of a building can improve the productivity of its occupants. Also, occupiers spend substantially more on staff than on building related costs, which means that a small increase in productivity can be highly effective in leveraging companies’ bottom line.
He says: “Moving to a better quality building can also help occupiers achieve additional efficiency gains through larger floor plates, more efficient office layout and the implementation of flexible work environment where employees can choose from different workspaces to match the type of work they are doing at any given time.”
Campbell Pritchard, CBRE New Zealand’s Director Advisory & Transaction Services Office, says that among the space coming to the market is 125 Queen Street, a landmark building in the heart of Auckland’s CBD. “Following a complete refurbishment that is delivering an A-grade quality building, whole-floor tenancies of 650-720sqm, and part-floor tenancies including small suites of 200-350sqm, are available,” he says. “Bespoke interior fitouts are available and high profile signage and naming rights are available, including a large scale LED display.”
The St George Corporate Centre at 96 St Georges Bay Road will also offer tenants unparalleled convenience in the flourishing centre of Auckland’s educational, commercial, transportation and business heartland.
“Currently being built by Mansons, St George Corporate Centre is a building of the future,” says Pritchard. “With a 5 Green Star rating, the highest quality office and retail accommodation and onsite café, the centre will consist of four levels of quality office accommodation and two levels of basement parking, spread across 10,400sqm of rentable office area.
“Mansons is also creating a stunning new 5 green star development at 46 Sale Street that will dominate the cityscape in this emerging precinct. Programmed for completion in fourth quarter 2017, this brand new commercial office development consists of seven floors of office accommodation with secure carparking in the basement and more long term parking options available nearby. The net lettable area is approximately 11,350sqm with large efficient floor plates of 1,700sqm (levels 1-6) and 1,150sqm (ground).”
View the New Zealand Herald article
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