Office Vertical Vacancy Review Q3 2024
The office sector continues to adapt to changing workplace preferences, with a strong emphasis on quality and flexibility.
- Chris Dibble
- Hina Imran
Despite some easing in the employment market, organisations remain committed to providing exceptional workplace environments as a key strategy for talent acquisition and retention. The focus has shifted beyond location, with increasing importance placed on spaces that facilitate collaboration, support employee wellbeing, and offer adaptable layouts to accommodate various work styles.
Key findings:
Prime vs. secondary assets: The performance gap between prime and secondary assets has widened, reflected in occupancy rates and rental values. This trend underscores the market's heightened discernment and the growing importance of asset quality in investment decisions.
ESG momentum: While New Zealand lacks mandatory Green Star and NABERS ratings for commercial real estate, the momentum behind Environmental, Social, and Governance (ESG) initiatives continues to build. Buildings with strong ESG profiles are attracting premium rents and demonstrating greater resilience in the face of economic uncertainties, with lower vacancy rates.
Our cities at a glance:
Christchurch:
Prime CBD vacancy remains low at 3.2%, unchanged since Q1 2024
16 out of 19 buildings are at full occupancy, with 13 buildings experiencing zero vacancy for the past two years
Average net prime CBD rents remained stable after a 4.5% increase in the previous quarter
Wellington:
Premium building vacancy is at 6.1%, while A-grade vacancy is at 5.5%
Overall city vacancy increased to 5.9%, up 100 basis points since Q1 2024
Average gross prime rents increased by 2.1%, primarily due to rising operating expenses
Auckland:
Core CBD premium vacancy is at 2.2%, with a slight increase of 30 basis points from Q1 2024
Core CBD A-grade vacancy is at 16.7%, up 70 basis points from Q1 2024
Prime rents continue to grow, albeit at a slower rate, with average net premium rents increasing by 0.7% this quarter
This research report provides insights for investors, occupiers, and industry professionals navigating the dynamic New Zealand office market. Download below, or for more detailed information, please get in touch with our team of experts.
