Shore office market
North Shore vacancy rates rose slightly over 1H20 and now sits at 3.3%. This is 10 bps higher than 2H19 levels. At a township level, Takapuna vacancy fell to 2.9% from 3.0% in 2H19, while Albany vacancy rose to 4.2% from 3.7%. This overall rise in vacancy, as is the case with other Suburban oﬀice markets, is largely the result of a comparatively diverse tenant makeup with diverse experiences of Covid-19 business impacts. The net result has been dampened demand for office space and vacancy increase.
Overall, the North Shore stock base rose over 1H20. While total stock in Takapuna remained at 177,919 sqm, accommodation in Albany rose 5,736 sqm to 72,886 sqm from 67,150 sqm at 4Q19. This rise in supply was the direct result of the ANZ building’s completed refurbishment which reintroduced space back into Albany. With completion imminent, 55 Corinthian Drive is expected to bring an additional ~5,390 sqm to Albany before the end of 2020. The remainder of the North Shore oﬀice pipeline continues in various stages of planning rather than construction now, however.
Average upper and lower rents for the North Shore oﬀice market both fell over 2Q20. They now sit at $385 psm and $252 psm respectively. Upper yields for the North Shore oﬀice market rose to 5.13% from 5.00% last quarter, while lower yields sotened to 6.50% from 6.25% in 1Q20. We recorded one significant sale at 44 Taharoto Road in Takapuna this quarter, selling for $25.5 million in June. The low number of transactions reflected investors' opting to take a wait-and-see stance during 2Q20.