Demand for prime office space in major centres remains strong, as companies adapt to changing attitudes to work life.
Photo: 123rf
JLL NZ's biannual Vertical Vacancy Report shows that vacancy rates in Auckland's core increased marginally in the first quarter (Q1) of the year, versus the third quarter of last year to 8.9 percent, while vacancy in the Wynyard Quarter was at 3.4 percent.
The Q1 data shows an additional 9300 square metres of floorspace had become vacant in Auckland, which could accommodate about 650 office workers.
"From an occupier perspective, this hints that companies are adapting their floorplate requirements to the new normal of hybrid working," JLL NZ head of research Gavin Read said.
He said there was strong demand for quality buildings in good locations, growing divergence between prime and secondary rents.
"Companies are prioritising flexibility, sustainability and wellness elements to attract and maintain staff."
He said there had been limited additions to supply in Wellington in recent years, as government requirements continued to support low vacancy levels and place upwards pressure on rental levels for prime office space.
Christchurch had experienced a subtle drop in vacancy, with the 15,000-square-metre Grand Central fully leased.
"For investors and landlords, tenant quality and long-term viability of their business remains a critical focus with owners increasingly seeking to de-risk future returns," he said.
While demand for quality, green buildings remained strong, Read said rising interest rates on yields would influence future investment and development activity.
"The delivery of these projects will rely on various factors including pre-commitment, the ability of the construction industry to keep up and how the government's post-pandemic responses roll out."