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Bayleys Research


ANNUAL 07 HAMILTON REGIONAL FOCUS REPORT

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HEALTHY OFFICE SECTOR

Continued uptake of office space within Hamilton’s CBD has driven vacancy rates down to 7.7% over the last 12 months, according to the latest Darroch Valuations (Waikato) vacancy survey. The downward trend in office vacancy rates in Hamilton’s CBD continues after the four year high of 10.2% was recorded in mid-2006. All grades monitored in the survey recorded decreases since the mid-year survey last year showing that there is still good tenant uptake for office space in Hamilton.

 

 

One of the most significant office leasing deals in Hamilton’s CBD over the last year has been the first floor office space at the old Deka site. The office space, comprising 2,150m2 of Grade A space, has been vacant for over five years, but is now fully tenanted to call centre Sitel. This along with the successful leasing of other pockets of Grade A space over the last year has brought vacancy in this category back to sub-5% levels.

While Grade C space recorded the largest percentage point decrease in vacancy since the last survey, this was a result of refurbishment and upgrade of the T&G building to Grade A space, which in turn decreased the amount of net lettable area and vacant space in the Grade C category. Since the refurbishment to a higher standard of office accommodation, almost one third of the building has been leased.

The continued preference for better quality office space in Hamilton has resulted in a slight increase in rents being achieved, currently ranging between $160 and $240 net per square metre. The latest increase in rents has attracted the attention of developers as the rental rates for proposed developments at this level have become more appealing. Currently a number of developments in Hamilton are underway or in the pipeline. By way of example, Perry Developments’ inner city development has resource consent, with a further high quality development on Bridge Street in Hamilton East commencing with Deloitte as the anchor tenant. There is also the four-level office and retail development at the Wintec sandpit site on the corner of Ward and Anglesea Streets and reports of further development of new office space proposed for the near future. While this is likely to test the strength of the office market over the next few years, past performance of the sector and the current strength of the market suggest that vacancy rates are unlikely to increase significantly.

 

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