Auckland Fringe and Suburban Office Market Snapshot Q1 2019
The Southern Corridor is expected to maintain the highest level of availability in Auckland, offering the greatest amount of large vacant continuous floorplates.
*Suburban office refers to Newmarket, Takapuna and the Southern Corridor sub-markets.
Demand for office space continued at similar levels across the fringe and suburban markets, as tenants remained focused on acquiring quality, well-appointed and connected accommodation. Going forward, the Southern Corridor is expected to maintain the highest level of availability in Auckland, offering the greatest amount of large vacant continuous floorplates.
1Q19 saw the practical completion of Mansons 33 Broadway, anchored by Tegal and Mercury Energy. The project saw ~13,300 sqm of A-grade stock enter the Newmarket area, following the current trend of larger and Green-star rated floorplates.
Developments still progressing through the pipeline include ~2,000 sqm due to be completed at Argosy’s 99 Khyber Pass in 2Q19.
This quarter we have seen rental growth across the decentralised markets, with Newmarket, Takapuna and the Southern Corridor all recording a rise in rents. The increases were mainly driven by low vacancy rates and, in particular, minimal availability in the higher end of the market.
The first quarter saw some marginal yield compression, specifically in the Newmarket and Southern Corridor markets. This is a result of continued rental growth, limited vacancy, low interest rates and growing competition from investors looking to hedge their capital outside of the traditional CBD market.
A majority of rental growth is expected to have played out this cycle, with suburban and fringe office demand now satisfied to a larger extent. This is forecast to dampen upward pressure on rental rates.