CBD feels the squeeze
Auckland suffering critical shortage of office space despite return of cranes on skyline.
Auckland's CBD has cranes on its horizon again, but not enough to resolve a critical office-space squeeze - with less than the equivalent of a football-field of inner-city A-grade commercial space available to lease.
New Colliers International research has shown the city's available floorspace is at an all-time low, despite developers trying to meet demand.
Chris Dibble, Colliers' national research manager, said Auckland businesses were so squeezed for space that the city was experiencing its most critical shortages on record. Rents could be about to shoot up fast and businesses wanting space would just have to wait.
The results surprised Dibble.
"We knew it was going to be low, but not this low," he said.
"The prime sector for premium and A-grade vacancy rates in Auckland CBD is just 1.4 per cent, beating our expectations of 2 per cent. It was 4.7 per cent six months ago and the 20-year average is 8.2 per cent.
"The vacant space aggregates to just 6116sq m, less than a soccer field and unprecedented in our records, which began 20 years ago."
Auckland's CBD property housed some of the most productive businesses in New Zealand and with little space available for expansion the potential growth of the country was being stalled at a critical time in the cycle, Dibble said.
"In a market that needs to attract quality staff through quality environments, the lack of available space and developments nearing completion means we will stumble just as we were making headway in what has been a tough slog for many."
There were only 11 prime buildings with vacant space available, Dibble said.
"Only eight buildings can accommodate more than 20 staff (currently 11 per cent of the overall CBD market).
"Tenants who haven't found suitable accommodation will have to forgo quality or wait until early 2016 for a slight reprieve from spec builds such as Mansons TCLM's development or Goodman Group," Dibble said.
"Then it's 2019 for Precinct Properties' redevelopment of downtown.
"Of course, this is good news for landlords, who in the face of demand and little alternative options for tenants will start to hike rents more aggressively over the next 24 months and incentives will dry up."
On the corner of Graham St and Victoria St, Mansons TCLM is putting up a 20,000sq m office block with huge floor plates of 3000sq m to 3500sq m, designed to be energy-efficient, Green Star-rated with high-tech glazing systems.
The building is so big that two tower cranes are working there, said developer Culum Manson of the dark blue Australian-made Favco and a silver and white German Hammerhead.
State-owned broadcaster TVNZ is refurbishing its headquarters and Fonterra is developing new purpose-built offices in Fanshawe St.