Auckland CBD retail property market snapshot Q3 2020

November 17, 2020

CBD retail vacancy held up reasonably well over 1H20, despite negativity around the sector. Overall vacancy in the CBD retail property market rose 127 bps to 3.3% over the half. Included in these results was the 18,000 sqm added to the stock base by the completion of Commercial Bay retail precinct (100% leased at the time of survey). However, we are expecting to see vacancy increase more noticeably in our upcoming 2H20 survey. Key headwinds persist for retail which will be difficult for businesses to navigate.


With the opening of the Commercial Bay retail precinct, 1H20 ended at a total stock level of 155,405 sqm of space in the CBD retail market. Aside from the Commercial Bay retail precinct however, retail developments currently underway are finding it increasingly challenging to find occupiers. We are expecting new supply to become very subdued in the CBD from 2021 onwards as developments in the medium term are unlikely to feature a large retail component due to weakened occupier demand.

Asset performance

Average CBD net face rents fell to $2,450 psm from $2,675 psm in 2Q20. Average incentive levels also rose from 6.0% to 8.0% over the quarter. We expect the market, particularly for large prime space, to move toward turnover related rents rather than fixed rental levels. Yields have held static during 3Q20. Upper prime CBD yields sit at 4.00%, while lower prime CBD retail yields remained at 2Q20 levels of 8.00%. Over recent quarters, continued flight to quality has seen an increasing yield gap between upper and lower prime CBD stock.

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