The way we were: a look at New Zealand’s last 35 years
Since JLL New Zealand opened, real estate has dramatically transformed. We look at what sectors have changed the most.
We’re reflecting on 35 years in New Zealand – what an excellent opportunity to look at the country’s history and how it and the property market have changed since the start of JLL. Known back then as Jones Lang Wootton, we occupied a little office—with a bell that rang when the door opened—on Shortland Street in Auckland’s CBD.
It was an era of legislative reforms, implemented to address the nation’s economic crisis. In 1985 the New Zealand dollar was floated. The following year, under the leadership of David Lange, Labour introduced GST at 10 percent. By 1987—when we had our first crack at the America’s Cup in Fremantle—our population of 3.2 million was grappling with the potential implications of deregulation. One positive opinion held at the time was it would benefit offshore investment in New Zealand commercial real estate.
Today, New Zealand’s population is over 5.1 million and Labour is back in power. We’ve seen our annual GDP grow more than six-fold: from $57 million in 1986 to over $350 million at present. While we might think the current inflation rate of 6.9 percent is high, try 13.2 percent back then. Funding of your home loan, if you could get one, was over 18 percent – significantly higher than current rates.
When comparing ‘now and then’ in the property market, we’ve seen huge growth in New Zealand’s office markets.
In Wellington, office space has gone from 112,000 square metres (sqm) to over 1.75 million sqm. In retail, it was common practice to demand a one-off, turnkey payment—generally $85,000 to $120,000—in popular locations.
In the late 80s the Auckland office market was in full swing with space being leased as fast as it could be developed.
Talk of a two-tier rental system emerging between prime and secondary office space was beginning – the current ‘flight to quality’ started over three decades ago. In 1986, office prime rents were topping out at $350 per sqm. Today they’re over $750 per sqm.
In the industry of scaling up
Thirty-five years ago Auckland’s industrial areas of Wiri, East Tāmaki and Albany were in their infancy.
Now they’re part of the city’s key industrial precincts.
In the early days, when industrial buildings that had carpet in the office—but not air-conditioning—were classified as ‘modern facilities’, demand was strong for 2,000 sqm units.
Fewer occupiers were available for 5,000 sqm units, now considered on the small side for industrial spaces.
A modern way to build
Fast forward to today and a major focus is our responsibility to implement measures that positively impact the environment, such as building better quality and more efficient buildings to reduce carbon footprints. Just as important is how we create working environments to support the health and wellbeing of employees, irrespective of the type of industry or asset class.
The property market has come a long way since 1986, with a greater social conscience, locally and globally, from owners and occupiers alike.
It would be great to look back in another 35 years and see how far, as a country and an industry, we have moved these important dials.