Auckland North Shore Office Market Snapshot Q3 2019
The North Shore office market remains incredibly tight in terms of vacancy with largely static supply and rental rates.
Occupiers continue to absorb space with a number of new lettings across the North Shore office markets in the third quarter. While we do not conduct a vacancy survey in 3Q, JLL do not believe there has been a structural vacancy shift in the last three months, with the North Shore remaining incredibly tight in terms of vacancy. A significant lack of large new build office projects in Takapuna will help maintain these conditions moving forward, with construction in Albany likely to absorb some of this overflow demand.
Supply remained largely static in 3Q with marginal change resulting from limited refurbishment activity. The North Shore has some of the city’s lowest office vacancy rates and there remains an absence of large office developments to meet heightened demand due to rising construction and land cost. The rents required to support a new build are similarly likely helping keep a lid on development for now. However, we are aware of several projects waiting to secure anchor tenants before pushing go on construction. 55 Corinthian Drive remains the landmark office development in the North Shore pipeline. Once completed in mid-2020, this 5-star Green Star rated project will offer approximately 5,389 sqm of office space and 820 sqm of retail space with 283 carparks.
Rental rates held their 2Q19 levels, with no growth recorded in the North Shore office markets. This trend was repeated across the fringe and decentralised office markets, with only the Southern Corridor recording growth in Q3. The average prime Takapuna rent resides at $330 psm, reflecting a range of $260 - $400 psm.
The weight of capital continues to place downward pressure on yields, with firming ongoing in 3Q19. The average Takapuna yield firmed 25 bps to 6.13%, as a range of factors act to trend yields further downward.