WELLINGTON OFFICE REPORT
A tight tenancy market prevails at the moment with no let up in sight until late 2018 at the earliest
By then it is hoped that the large displaced tenants (due to the 14th November 2016 earthquake) such as Kiwibank, Statistics, Bank of New Zealand, Ministry of Transport etc will have gone back to their original buildings or will have found alternative space on a permanent basis, freeing up space for other tenants. Currently these major tenants occupy spaces from 120 sqm upwards and this is having a major affect on the amount of office stock being available. We can then add other tenants that have had to leave their buildings whilst their buildings are seismically reviewed or fixed such as Nokia (Nokia House, Manners Street) and the majority of tenants from City Chambers House in Johnston Street.
The tight market has meant that landlords are now more bullish and rents are rising for good quality space. Rents for space that has been vacant for more than 12 months are tending to remain static reflecting the fact there are definite reasons why these tenancies are still vacant – poorly presented, overpriced, no views, slack landlord, low seismic rating etc etc. Most new stock of a reasonable quality and with a good seismic rating is leasing within 2 – 3 months of coming onto the market.
Landlords are now offering less incentives than before and a 3 year lease may include one month’s rent free (for set up purposes etc) but not necessarily 3 months rent free which was the starting point for most negotiations pre the 14th November 2016 earthquake. Incentives (rent free and/or contributions to fit out) are still available but landlords are not so generous as they were in the past.
Average rentals per annum ex gst are $350 sqm CBD, $250 sqm Te Aro & $240 sqm Thorndon
Report written by Tom Burke. Owner. July 2017