Christchurch Office Market Snapshot Q3 2019
The Christchurch office market is still experiencing little movement in vacancy rates, indicating more stability.
The Christchurch office market is still experiencing little movement in vacancy rates, indicating more stability. Net absorption in the first half of the year more than halved from the end of 2018 statistic (2,331 sqm vs 5,403 sqm respectively). Despite this, there is still vacant stock left for tenants to continue moving up the grade spectrum. The CBD prime vacancy rate recorded in 1H19 sits comfortably at 5.7% (down 15 bps), and the CBD secondary rate climbed to 11.6% (up 251 bps) for the same period.
There was a slight increase in the stock base over 1H19 with just under 5,000 sqm added, all of which was observed within the CBD. New supply is still slowly returning to the market from the 2011 earthquakes that took a reasonable portion of the original stock base.
There are three sizeable developments that are due to be completed within 2019: the Spark building (5,000sqm), the PGG Wrightson building (3,000sqm), and the Daltons building (2,910sqm).
Prime CBD rents are slowly recovering from their small dip in 1Q19. Average prime CBD rents are recorded at $330 psm, with secondary CBD rents dropping a further $10 psm to $203 psm over the third quarter of 2019. Suburban rents have fallen slightly with average prime suburban rents at $218 and secondary at $143 for the 3Q19 period.
Yields have compressed slightly over all sub sectors with the exception of the secondary suburban market. Average prime and secondary CBD yields currently sit at 6.25% and 7.43% respectively, with prime and secondary suburban yields at 7.45% and 8.50%.