Auckland Fringe office
market snapshot 2Q20

Demand

Overall Suburban and Fringe vacancy rose from 6.2% to 7.2% over 1H20. Only Takapuna saw lower vacancy levels this half, falling slightly to 2.9% from 3.0% in 2H19. CBD Fringe saw the largest rise in vacancy, now sitting at 9.5% (2.2% higher than last half). The Southern Corridor saw an increase of 1.0% to 10.4%. This rise in vacancy is largely the result of the diverse tenant pool across the Suburban and Fringe office sectors who have been impacted by COVID-19 to a greater or lesser degree.

Supply

 The CBD Fringe and Suburban markets both saw positive net completions this half. This resulted in a rise in total CBD Fringe office stock to 422,240 sqm, and a rise to 613,104 sqm in total Suburban office stock. In 1H20, we recorded the completion of several projects. Among these were the refurbishment of 107 Carlton Gore Road in Newmarket by Argosy and 74 St Georges Bay Road in Parnell, a new build of 2,054 sqm by Mansons TCLM.

Asset performance

 Average net face rents have fallen across the board in 2Q20. Rents in the CBD Fringe saw the largest change, with the average net face rent falling 7% to $261 psm. Newmarket, Takapuna and the Southern Corridor all saw a fall of 5% over the quarter. This change greatly contrasts the trend of increasing rents experienced in previous quarters. The Suburban office markets have fared worse than the CBD during 2Q20 with rents having lowered and incentives having increased. Changes in demand for accommodation have also negatively impacted rent and incentive levels.