Auckland CBD retail
market snapshot 2Q20

August 05, 2020

Despite negativity surrounding the retail sector, CBD retail vacancy has held up comparatively well during 1H20. Overall vacancy in the CBD retail property market increased by 127 bps from 2.0% to 3.3% between January and July. Included within 1H20 survey results are the completion of the 18,000 sqm (100% leased at the time of survey). That said, we do expect to see vacancy tick up more noticeably throughout the rest of this year as new tenants are fewer in number and numerous existing businesses are clearly under pressure.


The opening of the highly anticipated Commercial Bay retail has provided an additional 18,000 sqm of premium retail stock into the CBD, ending 1H20 with a total stock level of 155,405 sqm. It has proven popular in early trading, particularly for food and beverage tenants. Aside from Commercial Bay, retail developments currently underway are finding it increasingly challenging to find occupiers. As a result, we believe new CBD retail supply from 2021 onward will become subdued. Developments in the medium term are unlikely to feature as large a retail component due to weakened occupier demand.

Asset performance

Given the COVID-19 shock to the market and reduced occupier demand, prime CBD net face rents decreased to $2,675 psm (-6.1% q-o-q). Average incentive levels also increased from 4.2% to 6.0%, with landlords being forced to compete to both retain and attract quality occupiers. Upper prime CBD retail yields have once again held static at 4.00% for the third quarter in a row. Lower prime CBD retail yields have softened by 25 bps to 8.00%. A flight to quality sees an increasing yield gap between the upper and lower prime stock.

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