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Auckland

Auckland is New Zealand’s largest city with a population of 1.5 million and home to more than a third of the country’s population. Over a third of the city’s presence was 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 anticipate will climb to 2.2 million by 2043.

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

Auckland’s reputation as leading innovator is on the rise, with a robust innovation environment of start-ups, co-working spaces, technology and innovation hubs, keeping the property cycle going and commercial real estate agents in Auckland busy. The technology sector is sustained by strong networks between government and industry investors which have collaborated to develop tech hubs, incubators and accelerators, significantly impacting commercial real estate market in Auckland. GridAKL, based in Auckland’s Wynyard Quarter cultivates knowledge sharing between 70 tech companies. By 2020 it’s expected GridAKL and the wider innovation precincts in Wynyard Quarter will contribute $450 million annually to Auckland’s economy.

The city’s economy is also supported by strong levels of international education, tourism and construction, with several major developments currently in progress around the city and a vibrant property sector with substantial demand for commercial properties for sale in Auckland.

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Office leasing trends in Auckland

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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