Auckland Southern Corridor office market snapshot 2Q20
Vacancy in the Southern Corridor rose 100 bps to 10.4% from 9.4% in 2H19. This mirrors trends seen across the Suburban markets, as overall suburban vacancy rose from 5.5% to 5.7% over the half. As with the other Suburban oﬀice markets, this rise in vacancy is largely a consequence of the broad tenant makeup in the sector. Tenants in the Southern Corridor have been noticeably more aﬀected by COVID-19, especially those in the education sector.
Total stock in the Southern Corridor oﬀice market rose to 185,471 sqm over 1H20, up 2,341 sqm from 183,130 sqm in 2H19. This was the result of a number of completed refurbishment projects. Much of the Southern Corridor oﬀice market development pipeline remained in the planning stages over 1H20 as development activity remains subdued presently. Refurbishment activity is expected to continue over the coming quarters, however.
The Suburban oﬀice markets have fared worse than the CBD over 2Q20, with rents lowering and incentives increasing. However, the Southern Corridor again remains the most aﬀordable of the suburban oﬀice markets tracked. Upper and lower rents both fell over 2Q20 and now sit at $314 psm and $209 psm respectively. Average rents for the area fell to $261 psm, and incentives increased to 13% from 10% in 1Q20. While upper yields sotened to 5.63% over the quarter, lower yields similarly rose to 6.75%. This has resulted in an average yield of 6.19%.