Major Auckland CBD Office Occupier Moves

• Smaller space requirements due to hybrid working versus return-to-work mandates, 

• Flight-to-quality versus cost control, 

• Locational centralisation versus employee resistance to commute, 

• Right-sizing headcounts to weather the recession versus being well-positioned for future growth.

Which of these trends are supported by data? CBRE New Zealand Research did a deep dive to find out?

We’ve done a deep dive into the top occupier moves of 2023 and 2024, across Auckland’s CBD, including Wynyard Quarter on the west, Quay Park on the east, and as far as Karangahape Road to the south.

Included are occupier moves in all of 2023 and 2024, focusing on occupier moves where the tenant‘s take-up was 1,000sqm or more, and ranked these from largest to smallest, by year.

Positive numbers show the size of the space taken up and negative number the space the occupier left behind when occupiers departed. Colours show the quality grade of the space taken up and departed from. As an example, occupier 8 left a 4,500sqm B-grade space (light blue/green) and moved to a 2,300sqm A-grade space (darker blue/green).

By Square Metre & Grade, Auckland CBD & Wynyard Quarter

In a nutshell, what does this graph illustrate?

There were more 1,000+ sqm moves completed in 2024 than in 2023 (29 in 2024, 18 in 2023). Flight-to-quality is popular, although a change of scene can be just as good for Prime occupiers. In 2024, three in four occupiers who took up space expanded, rather than contracted.

Flight-to-quality, flight-to-value, or just a change of location?

Although the last two years have been economically tough, at the top end of town the flight-to-quality trend held, with relocations to the same or better grade in 93% of 2023 transactions, and 100% of 2024 transactions. In our 2023 sample 7% of occupier chose to drop a grade, while in 2024 there were none.  From this we can say that contraction played a minor role in 2023’s occupier moves, while in 2024 the focus was on maintaining or improving larger occupiers’ positioning ready for the next economic growth phase.

Positioning didn’t always mean a change of scene, however...

In both 2023 & 2024, approximately one in five transactions resulted in an occupier staying in the same premises though expanding their footprint. Around four in five were relocations to a different tenancy, either in the same building or a different one. New entrants didn’t play much of a role in this space in 2023 and 2024, with only one new entrant in our sample in 2023, and none the following year.

Brand new or existing?

New office buildings in the CBD tend to be Prime (Premium or A-grade) quality and attract large tenants willing to commit to long leases of more than nine years. In 2024, 31% of occupier moves were to brand new or newly refurbished buildings, up from 22% in 2023. The biggest moves in 2023 and 2024 are mostly driven by new buildings, either directly as occupiers move to the new space, or indirectly as the backfill vacancy spaces they’ve left are taken up.

2023’s biggest moves were driven by the completion of 1 Queen Street, with Deloitte taking up over 7,600sqm of office space and naming rights, with bankers BNZ taking up the space Deloitte had vacated at 80 Queen Street in 2024. Bell Gully also moved in 2023, leaving the Vero Centre, and went to 1 Queen Street.

New addition 50 Albert absorbed four of the ten largest take-ups in 2024, including Spark (#1), FNZ (#3), Regus (#6) Milford Asset Management (#10), while the fourth biggest move was Zuru, who took a sublease of just under 4,000sqm in the former Spark HQ.

Expansion vs contraction – which was dominant?

When we considered all the moves by size, we found the occupiers often chose expansion (76% in 2024, 78% in 2023). Contractions took place in around one in five occupier moves over both years (17% in 2023, 21% in 2024). Four key occupier trends are evident in the Auckland CBD market:

1. New and newly refurbished buildings drive larger occupiers moves in the market, but almost 70% of 2024 moves were into existing buildings.
2. Flight-to-quality is aspirational, while holding at the current quality level is also a popular choice, while there is no interest in quality downgrades.
3. The major driver for new space Prime availability in existing buildings in 2023-2024 was occupier moves to new building.
4. Three in four of occupiers in 2024 chose to implement an expansion strategy in 2024.