New Zealand Market Dynamics - Q3 2024
JLL New Zealand’s Market Dynamics report provides property insights into how the office, retail, and industrial sectors are faring across the country.
- Chris Dibble
- Hina Imran
- Monish Khan
Our real estate market research is based on data from several reputable sources including on-the-ground insights from our own departments.
Office
New Zealand's office market in Q3 2024 shows mixed trends across the three cities JLL tracks. In Auckland, vacancy rates for prime and secondary offices increased, although premium buildings maintained a low vacancy rate, at just 1.9%. Prime rents continue to grow, albeit at a slower pace than in recent times. Wellington experienced increased vacancy rates for both prime and secondary spaces, with prime rents rising in line with OPEX increases. Premium premises remain sought-after. Christchurch saw decreased vacancy rates across precincts, with CBD vacancy at a record-low 3.8%. Economic factors, including changes in government policies and interest rates, continue to influence office demand and occupancy levels. Sustainability credentials is increasingly a key driver for tenants seeking office space, while demand for high-quality, well-located office spaces is persistent.
Industrial
The industrial sector remains robust in Q3 2024. Auckland’s industrial sector is the country’s busiest commercial real estate market, leading in sales transaction volume. Auckland's overall vacancy rate decreased slightly to 2.3%, Wellington's dropped to 1.0%, and Christchurch experienced a decrease in vacancy to 1.7%, with prime vacancy reaching its lowest recorded level at 0.6%. Rental growth is generally slowing but remains positive across all three markets. Transaction volumes are expected to increase over the remainder of 2024 and into 2025, though not reaching the peak levels of 2021. Overall, the industrial sector remains a strong performer in New Zealand's commercial real estate market, with continued demand for modern, large-scale facilities. Better economic conditions projected for 2025 will help boost sector conditions further.
Retail
The retail sector shows signs of recovery and adaptation in Q3 2024, with varying performance across major cities. Auckland's CBD vacancy rate increased marginally to 7.4%, with luxury retailers showing interest in prime locations, including the particularly sought-after area of lower Queen Street. Wellington experienced a decrease in overall vacancy to 7.2%, with active leasing in the CBD driving more positive sentiment. Christchurch saw a drop in vacancy to 4.4%, with new international brands entering the market. Prime rents in Auckland and Wellington have stabilised, while Christchurch continues to see increases, particularly in popular CBD locations. The sector has been challenged by low consumer confidence and online competition, but certain segments, particularly luxury retail, are performing well. As economic conditions improve, with expected lower interest rates and increased job stability, the retail sector is anticipated to gain momentum.
How great will the divergence between prime and secondary office space vacancy become in 2025?
Where is transactional activity the strongest in the industrial sector?
What trends are driving demand for retail space in the CBDs?
Find out more by downloading our Market Dynamics report below.
