Office Vertical Vacancy Review Q1 2024
Sentiment is trending marginally positive in the CBD office markets across Auckland, Wellington, and Christchurch following the RBNZ OCR forecast in February.
- Gavin Read
- Hina Imran
In this report, we explore the trends among occupiers and forecasts in rental growth and sustainability requirements in our latest edition of the Vertical Vacancy Review for Q1 in 2024.
Environmental, Social, and Governance (ESG), particularly the social aspect, are factors gathering momentum in conversations for employees, occupiers, and owners. Offices that offer premium end-of-trip facilities, are close to transport hubs, and support the growing demand for flexible working arrangements, will continue to be in high demand to assist businesses in attracting and retaining top talent.
We still hold our end-of-2023 view that moderate rental growth for well-located, quality properties will continue in 2024. Our latest data supports this, with an increasing divergence in rents between prime and secondary assets. Further, we expect the yield-softening cycle is close to its peak for higher quality assets, while secondary assets are still to experience some correction, especially if building resilience or upgrade work is needed.
“With a widely held view we have seen the peak of interest rates in this cycle, many are now forming a view of when interest rate cuts will be delivered to support what is expected to be a challenging 2024 for many businesses and consumers.”
Our cities at a glance
Auckland – Premium office buildings are at historic lows of under 2% vacancy. Auckland Core vacancies overall have increased to 12.2% (up from 8.8% in Q3 2023).
Wellington – Government tenants continue to be a significant driver of prime office demand.
Christchurch – 15 out of 18 buildings in the Garden City have 0% vacancy. Thirteen of these 15 buildings have shown 0% vacancy every quarter for the past two years.
