Auckland North Shore office market snapshot Q1 2021
Vacancy in the suburban office market increased substantially by 203 bps to 7.7% as SME businesses continue to experience the impacts of COVID-19.
Demand
Our latest 4Q20 vacancy survey results show vacancy in the suburban office market overall increased substantially by 203 bps to 7.7% as SME businesses (particularly tourism, hospitality and education sector occupiers) continue to experience the impacts of COVID-19. In the North Shore precincts, Albany saw the most notable increase in vacancy rising by 268 bps to 6.9%. In comparison, Takapuna occupancy remained tightly held with vacancy only marginally increasing by 42 bps from 2.9% to 3.3%.
Supply
Completion of the much anticipated 55 Corinthian Drive development in Albany saw ~6,000 sqm of quality A grade space added into the suburban office market during the six months to December 2020. Notable projects in the pipeline include the $120 million Munroe Lane office development (Asset Plus Limited), expected to commence in 1H21 supported by the Auckland Council anchoring some 63% of the building on a 15-year lease term with two six-year right of renewals. With a target completion of 2H22, the 7-storey new build will provide an estimated ~15,000 sqm of 5 Green Star office space into the Albany office market.
Asset performance
As at 4Q20, average net face rents have remained static at $318 per sqm with a lack of evidence indicating otherwise. Primarily due to external market forces not directly related to office investments, yields have continued their longer term trend of firming during the second half of 2020. This downward shif has been supported by a lower return environment nationally, regionally, and globally coupled with lower borrowing costs.
