Research

New Zealand office market snapshot Q4 2022

JLL’s New Zealand Office Market Snapshots provide property insights into how the office market is faring within Auckland, Wellington, and Christchurch.

February 22, 2023
Contributors:
  • Gavin Read
  • Hina Imran

Our real estate market research is based on data from several reputable sources including on-the-ground insights from our own departments.

The divergence between prime and secondary office space for lease is widening as the ‘flight to quality’ continues from the past two years. Employers are seeking properties that amplify themselves in the battle to attract and retain top talent. This is being reflected in the uptake of vacant properties as well as in cost per sqm across Auckland, Wellington, and Christchurch.

As employers lean further towards prime spaces in line with their strategies to provide flexible, fit-for-purpose offices, vacancies are decreasing in Auckland and Christchurch in particular. In Auckland CBD, vacancies dropped to 10.8% from 11.6% for 2H22, suggesting nearly 10,000 sqm of additional uptake. In Christchurch, vacancies decreased to 4.0% from 4.6%, or just under 2,000 sqm of uptake. Looking at prime spaces compared to secondary, prime vacancies in Auckland CBD are 5.4% while secondary sits at 16.3% - evidence of the widening gulf between grades as organisations seek the best locations for their people.

Wellington’s office market remains supported by continuing government demand for properties, despite slight vacancy increases across grades and regions. The new Bell Gully Building, formerly known as Site 9, is fully leased and provides prime waterfront office and retail offerings – a refreshing narrative for the Capital and a sign of things to come with several major developments in the pipeline including the $200-million Cuba Precinct and the $290-million Aitken Street project.

In Christchurch, over 3,500 sqm of office space was completed in Q4 2022. Further developments in the pipeline will add primarily prime space to the market, especially as we are seeing older, earthquake-prone buildings receiving necessary upgrades bringing them into line with regulations. Owners and developers are taking these upgrades as opportunities to enhance their properties, adding more desirable assets to the market.

Average net rents and yields slightly softened across most markets.

  • What key developments are in the pipeline across our biggest cities?
  • What factors are widening the gulf between prime and secondary properties?
  • How will the increasing interest rate environment continue to impact yields?

Find out more below.

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