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Auckland Central

With a population of over 1.5 million, Auckland is New Zealand’s largest city and home to more than a third of the country’s population. Over a third of Auckland’s inhabitants were born overseas, making Auckland the fourth most culturally diverse metropolitan population behind Dubai, Brussels and Toronto. Auckland’s popularity among immigrants to New Zealand has been a primary driver of its rapid population growth, which Statistics NZ project will climb to 2.2 million in 2043.

Auckland serves as a key gateway to Asia Pacific markets. Its port is the second largest in New Zealand, serving more than 30 global and regional shipping lines and processing 950,000 containers a year. For the second consecutive year, it has been voted the best seaport in Oceania. One third of New Zealand’s freight transport and logistics companies are located in Auckland, working to efficiently distribute goods around the country.

Auckland has a growing reputation as a leading innovator, with a robust innovation ecosystem of start-ups, co-working spaces, and technology and innovation hubs. The technology sector is buoyed by strong networks between government and industry investors which have collaborated to develop tech hubs, incubators and accelerators. Auckland’s Wynyard Quarter is home to GridAKL, a business which fosters knowledge sharing between 70 tech companies. GridAKL and the wider innovation precinct within Wynyard Quarter is expected to contribute $450 million annually to Auckland’s economy by 2020.

Auckland’s economy is also supported by strong levels of international education, tourism and construction, with several major developments currently in progress around the city.

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Office leasing trends in Auckland Central

Vacancy has reduced dramatically over the past few years, following a notable increase post-GFC. Demand for high quality space has ensured prime vacancy rates have remained low in recent years, sitting at 5.1% as of 2H17. Secondary grade vacancy remains relatively stable, regulated by refurbishment, redevelopment or change of use activity when backfill space becomes available.

White collar employment growth has supported robust development activity, with a number of notable buildings currently under construction. . The most notable increase to supply will enter the market in 2019, with 39,000 sqm of premium grade space in the Commercial Bay development.

CBD office rents held steady in 2H17, maintaining an average face value of NZD 548 psm. The market that has seen net effective rents growfrom NZD 357 psm in 2011 to NZD 525 psm (+47%) in 2017. Rental growth is forecast to continue at a moderate pace through to 2020.

 

Parameter

Current Scenario

Outlook (2018 – 2021)

Prime Office Stock (In sqm)

558,460 sqm

Increase

Vacancy (in %)

5.1%

Flat

Average Rents (NZD per sqm p.a.)

$489

Increase

Capital Value (NZD per sqm)

$8,728

Increase

Parameter

Auckland Scenario Y-O-Y

 

Net Absorption (Sqm)

22,088 sqm

 

Supply

Grew by 7.6%

 

Vacancy

Grew by 292 bps

 

Rental Appreciation

Grew by 2.4%

 

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