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News Release

Auckland

Takapuna office vacancy reaches a historic low


 

 

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Takapuna office vacancy has fallen to its lowest level in 10 years as options for tenants dry up. Vacancy surveys undertaken by JLL show the market has a 3.9% vacancy. A combination of restricted new supply to the market and a surge in demand from occupiers has been the driving force behind Takapuna’s low vacancy rates, which have been sitting in the low 4% range throughout 2015 according to JLL’s latest research.

Head of JLL’s North Shore team David Mayhew says, “The Takapuna market continues to be a highly sought after destination for businesses on the North Shore and with limited supply coming online, landlords are feeling confident in respect to occupiers.”

“Commercial occupiers are becoming increasingly attracted to Takapuna not only for its coastal environment but due to its ability to provide a balance between cost efficiency and quality in a decentralised location, just a 10 minute drive from the Auckland CBD,” says Mayhew.

Takapuna has stolen the spotlight in terms of suburban rental growth increasing by 5.9%. Decreasing vacancy rates are shrinking tenants’ options in the area and putting the bargaining power in the hands of land owners, pushing tenants to compete more on price for commercial space.

Mayhew continues, “Rents are forecast to move upward over the short-term with no indication of demand from tenants lessening. As market enquiry continues to increase, we expect to see more property owners explore the options of redevelopment and refurbishment of their buildings to take full advantage of the current conditions.”

Occupier enquiry remains robust and is pushing rentals higher, nearing the peak last seen in late 2007. With limited space for occupiers on the North Shore, JLL expect some tenants will have to explore other areas of the market. Both the upper and lower series of rental figures saw a strong uplift over the last six months with an increase of $10psm, as the average rents are now sitting at $241psqm. The primary driver of this increase was fierce competition for lower grade space pushing up the rents in this part of the market. JLL predicts rents will continue to rise accordingly in the Takapuna market with the average rental expected to peak at $274psm within the next 5 years.

With the current market conditions making the option of new development more viable, although the medium to long-term pipeline is restricted, there have been several landlords evaluating their options to redevelop or start new projects in the area. 1 Byron Ave which is already under redevelopment, will add an additional two new floors to the supply, approximately 2,000 square metres of much needed office space in Takapuna in the first half of 2016. Also scheduled for release to the market around that time is Building 4 at 61 Constellation Drive in Rosedale as well as 33-45 Hurtsmere Road which has undergone redevelopment. This additional space however is expected to be leased up quickly due to high occupier demand in the area and larger spaces being increasingly more difficult to acquire.

With only 40% of the 10.8 hectare Smales Farm Technology office park currently  developed, there is a major opportunity for several office buildings to be developed in the area which could add several thousand square metres to the precinct over the next few years. 

The future for Takapuna looks very positive and the opportunity to capitalise on this trend exists for landlords. Commercial agents Brandon Morley and Marg Mills who focus on the North Shore markets are currently working with three large corporates with 1,000sqm plus requirements looking to relocate to Takapuna, indicating further demand. 

JLL predict strong demand will continue to decrease any vacancies and rents will rise accordingly as occupiers continue to move into these precincts.