Auckland CBD office market snapshot Q3 2020

November 17, 2020

Overall vacancy in the CBD office property market increased 285 bps to 8.1% over 1H20. This is largely attributed to a 460bps increase in secondary space vacancy from 6.5% to 11.2%, eclipsing a 110bps increase in vacant prime space from 3.7% to 4.8%. As business workplace strategies evolve in the wake of COVID-19, we are seeing a dramatic rise in sub-lease availability, with estimates suggesting ~80,000 sqm is on offer. This gives occupiers an opportunity to move up the grade scale, at the cost of lower grade stock.


The addition of 39,000 sqm of office space with the completion of the new PwC Tower meant total stock at the end of 1H20 was 1.26m sqm. As at the date of this report, One55 Fanshawe Street is nearing completion and will offer a further 16,000 sqm of A-Grade office space, of which 90% is pre-committed. Other notable developments currently underway include 10 Madden Street (7,900 sqm, 100% pre-committed) and 136 Fanshawe Street (20,000 sqm, 70% pre-committed), with both providing more A-Grade stock by 2021. Due to COVID, however, many medium-term projects are now on hold.

Asset performance

Average prime net face rents decreased 0.5% over 3Q20 to $516 psm, while secondary rents fell 3.1% to $262 psm. Of note, however, is the worsening of net effective rents as incentives have risen. Prime net effective rents fell 5.1% (qo-q) overall to $440 psm and secondary decreased 7.9% to $211 psm, meanwhile average incentive levels climbed 10.4% to 14.6% over 3Q20. The gap between prime and secondary office yields continues to expand, with prime yields firmed 6bps to 4.88%, while secondary yields expanded 19bps to 6.00%.

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