Christchurch's office market shows signs of further stabilisation with the vacancy rate dropping slightly and rents remaining the same for the last two quarters.
The Christchurch CBD vacancy rate took a slight fall over the last half of the year, dropping 79 bps to 6.7%, while the suburban office vacancy rate increased slightly by 44 bps to 10.1%. Such small movements in both markets show signs of further stabilisation.
Six monthly net absorption has remained stable over the last 18 months sitting between 3,000 and 4,000 sqm for the last three biannual vacancy survey periods. Regardless of the absorption over this year being significantly less than previous years (~6,000 sqm versus 30,000+ sqm in 2017 and 2018), there is a fair amount of vacant stock still to be filled.
For the third vacancy round in a row, the total net increase in the Christchurch office stock was seen in the CBD only. The construction pipeline has slowed significantly in terms of completions, with only around 6,000 sqm being tracked through currently - under a third of what was recorded six months ago. With a more balanced supply and demand outlook, net absorption and net completions will likely stay low and this is shown with the amount moving through the pipeline.
The new Spark building (~5,000 sqm) in Cathedral Square is due to be completed early 2020 with the last of the interior being finished at the time of writing.
Prime CBD rents have held firm at $330 psm over the last three quarters while secondary have stayed at the same level for two quarters at $203 psm. Prime suburban rents have taken a slight dip coming down to $213 psm with secondary suburban increasing slightly to $145 psm.
Contraction was seen in secondary CBD as well as prime and secondary suburban markets whilst prime CBD held onto its 3Q level.