Skip Ribbon Commands
Skip to main content

News Release


Secondary stock presents opportunities for tenants feeling the squeeze



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

​​Prime vacancy has been reached its lowest point ever in the 26 year history of real estate consultancy JLL’s office vacancy survey. With such a critical shortage in Prime office space and limited new supply in the short-term, this situation is likely to persist for some time.  Vacancy in secondary stock however remains elevated and presents a realistic choice for tenants that are willing to look further afield.

Overall Auckland CBD office vacancy is now at 7.9% falling from 10.5% a year earlier. This is one of the largest 12 month declines on record and is an indicator of things to come. Premium vacancy is at its lowest point in the history of JLL’s survey at 0.6%. This is lower than the 3.4% achieved in the previous peak of the market through 2006 and 2007. Grade A vacancy is at 2.2%, also a record low and secondary vacancy has fallen but remains elevated at 13.3%.

The outlook remains tight however there is hope on the horizon. New supply particularly in the Viaduct will ease pressure with Precinct and Goodman delivering new stock in the long term. Significant tranches of space are likely to come on line over the medium term in the CBD also. These include the potential refurbishment of 125 Queen Street, 17,400 sqm, a building upgrade for 22 Fanshawe Street, 7500sqm, and large tranches of available space at 385 Queen Street.

Justin Kean, National Director of Research for JLL says, “When the Auckland office market sees vacancy fall below 10% this tends to indicate that conditions are tightening for tenants and landlords alike. Overall vacancy is now less than 8% and significantly less than this in Prime stock. As available inventory heads below this threshold the comparative opportunities for tenants diminish and landlords begin to be able to dictate terms.”

Mark Grant, National Director of Markets, adds “Tenants are now having to look further afield; CBD vacancies are at record lows but the CBD Fringe still sees vacancy sitting at 11.1% with Newmarket at 9% meaning these markets present options to tenants looking to expand. In addition, there remains secondary space available which perhaps not ideal, presents an opportunity to trigger refurbishment. Tenants will also need to plan further ahead, engaging with landlords today for expiries that are as much as two years in advance.”

JLL’s advice for tenants is ‘be quick’; as although there remains a degree of choice in the Fringe CBD and Suburban locations, these options will be highly sought after and will shift quickly as the market moves through the next part of the cycle. Grant continues, “Developers looking to bring refurbished space into the market are taking a development risk. Tenants can mitigate that risk and ensure the refurbishment takes place by pre-committing to space in advance, creating a win-win scenario for both parties. This is likely the best approach in a market where options are quickly becoming a thing of the past.”