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Bayleys Research


NORTH SHORE REGIONAL FOCUS 2008

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North Shore’s Development

Economic development in Auckland’s North Shore continues to intensify, with the completion of a number of office developments during 2007 bringing more businesses and employees to the area.

The net lettable area of office space in the North Shore has increased by approximately 8% over the last year to reach 330,000m2, according to the latest survey undertaken by Bayleys Research. This development growth has not only outstripped other main office precincts around the Auckland region, but business activity has also increased at a strong clip as well. The number of businesses based on the North Shore has risen by 4.6% in the last decade, which is above Auckland’s growth of 4% and New Zealand’s overall growth of 3.4%, according to a report undertaken by Business Economic Research Limited (BERL).

While the rapid expansion of office development has raised concerns about an oversupply of office accommodation, high levels of leasing and pre-leasing activity have restricted vacancy rates to an average of just under 8% since 2001, with the current rate now around 10%.

The latest net absorption level recorded was just shy of the results recorded the previous year, with approximately 18,400m2 of office accommodation absorbed on the North Shore in the year to January 2008. The last two years have almost doubled all of the net absorption levels recorded since 2002 and brings the total office floor uptake over the last five years to a substantial 68,000m2. A large part of the increase in absorption over the last year can be attributed to developments in the Smales Farm Technology Office Park and further development in the Albany office precinct.

The recently completed Sovereign building, which in tandem with Q4 are the latest additions to Smales Farm, have added approximately 13,500m2 of tenanted office space to the Takapuna precinct survey. This figure will increase with the completion of Q4, which is to provide a further 3,200m2 of office space spread over three floors.

The new Sovereign building showcases the latest advances in ‘Green Technology’ with a chilled beam air conditioning system and a main plant that has been designed to run the Q4 building and the future office development known as ‘Building C’. Once fully completed, the Smales Farm Technology Office Park is expected to provide 110,000m2 of high quality office space and provide employment for around 7,500 people.

Northbridge Properties’ development of the Albany area has also contributed to the increase in net lettable area during 2007, with now over $50 million worth of development in various stages. Specialising in low-rise office parks, local retail units and design and build projects, the development company has provided the area with a number of high quality office buildings. Premises range from as small as 70m2 to large open floor plates of over 1,000m2.

Takapuna and Albany are the two largest office precincts on the North Shore, with the battle for the largest office precinct still in favour of Takapuna. However, Takapuna, which has traditionally been the commercial hub of the North Shore, has experienced a lack of development in recent years. While the latest Smales Farm developments provide a small come back, the development occurring in Albany continues to challenge Takapuna’s previous dominance. Analysis of the office markets shows that in 2002 Albany’s proportion of office space on the North Shore was around 18%. This figure has now increased to 30%, according to the latest Bayleys Research survey results.

The proportion of office space is likely to shift further towards Albany with construction of the Albany Business Centre, which commenced construction in late 2007. The building is situated on Corinthian Drive overlooking State Highway 1. The first of the nine buildings proposed for the 12.5 hectare site will be a three-level building of approximately 3,600m2 and floor plates of up to 1,196m2. The Centre’s masterplan has been overseen by urban design specialists who have provided plaza areas to be situated near the cafes servicing the area. Anecdotal evidence suggests there have been strong levels of tenancy enquiry especially due to the flexibility provided with smaller floor plate sizes of around 300m2.

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