Auckland Southern Corridor office market snapshot Q1 2021
In the Southern Corridor office vacancy rose by 332 bps, which is the most notable increase in vacancy among the Auckland suburban office sub-precincts.
The Southern Corridor precinct saw the most notable increase in vacancy among the Auckland suburban office sub-precincts in our 2H20 survey. Vacancy rose by 332 bps from 10.4% to 13.7% over the half. Looking forward, with substantial sublease opportunity available in the wider Auckland office market overall and future supply additions, we expect to see increased competition for suburban office owners to fill vacant space. However, the market impact of this will vary based on location and the presentation of the office space available.
In 2H20 we recorded a slight fall in total stock of -6,271 sqm to 179,200 sqm due to refurbishment activity. Medium term developments such as Central Park Building 11 site (Oyster) are likely to remain in the development planning stages for the coming months in the current climate. Developers are also likely to remove stock for competing uses such as apartment developments or for redevelopment into better quality office space. Oyster for example was planning to convert an office building into a new Quest serviced apartment building on the Building 4 site at Central Park. The project is currently on hold.
Due to a lack of new evidence over the quarter, average rents in the Southern Corridor were static at $255 psm. When compared to the CBD office market, the suburban office markets continue to provide quality office space at relatively affordable rental rates. As a result, this has helped to support rental rates particularly for the top end of the market. in 4Q20, Southern Corridor yields firmed by 19 bps (q-o-q) to reach 6.00%. We did not record any significant transactions this quarter.