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GREATER AUCKLAND OFFICES

GREATER AUCKLAND OFFICE MARKET

The completion, over the last year, of the Telecom Campus and the new Britomart headquarters for Ernst and Young and Westpac has provided further evidence of the expansion of Auckland’s CBD north and west towards the waterfront, prompting Bayleys Research to redraw the boundary between CBD and fringe precincts. These latest additions to the CBD inventory have had a profound effect upon both the CBD and city fringe vacancy figures as illustrated by the results of the latest Bayleys Research Auckland office surveys. The consolidation of staff from multiple locations to these two major developments has seen overall vacancy levels falling in the CBD at the expense of fringe locations. The secondary quality sector has been particularly hard hit with landolords finding it difficult to re-let the vacated space.

The completion of these two major sites also marks the end of the development tail in Auckland’s commercial offices, which has lagged the beginning of the economic downturn by about three years. To this end, we expect the vacancy figures to have peaked and over coming years, as and when business growth commences, move downward. The next major office development to take place in Auckland will be Kiwi Income Property Trust’s ASB headquarters in Jellicoe Street, Western Reclamation. The 18,000m² building has a development cost of $126 million with an anticpated completion date of late 2013. The decision to refurbish ANZO’s ANZ Tower on Albert Street, at a cost of $76 million rather than develop a new tower, will help to protect vacancy in the CBD.

New Zealand narrowly avoided a double dip recession, although economic confidence remains heavily subdued. Rising food and fuel prices and disaster recovery have added to this. Confidence is expected to slowly build throughout the year, especially during and following the Rugby World Cup, which will spur economic growth in late 2011 and into 2012.