Flight-to-quality drives premium tightening

• The Auckland CBD office market continues to tell a story of divergence that has sharpened this quarter. The overall CBD office vacancy rate has decreased to 15.8%.
• Premium-grade vacancy fell by 60 bps to just 2.1%. The prime vacancy rate edged up by 30 bps to 11.1% with the introduction of new uncommitted supply and refurbished space now available for lease. Secondary-grade vacancy is now at 21.7%.

Prime pipeline reshapes the CBD

• Mosaic at 2-16 Wakefield Street, a newly completed A-grade commercial building, was delivered this quarter with a total NLA of 16,000 sqm.
• Along with refurbishment activity, key upcoming developments include Mansons TCLM’s 35 Graham Street, currently under construction, and, in planning, Britomart’s new office project and Precinct Properties’ Pūmanawa Downtown West development at the Downtown Car Park site.

Premium demand strengthens, driving rents higher and incentives steady

• CBD prime average net rents edged up by NZD 5 per sqm p.a. this quarter to reach NZD 620 per sqm p.a. Premium rents increased by NZD 7 per sqm p.a. to NZD 725 per sqm p.a., while A-grade space saw a modest NZD 2 per sqm p.a. increase to NZD 515 per sqm p.a.
• Driven by improving demand for premium and A-grade properties, leasing incentives held steady this quarter at 8.5% and 14.5%, respectively.

Outlook: Momentum builds despite yield softening

• The Auckland CBD office market is experiencing a phase shaped by both short-term market conditions and longer-term structural change.
• Despite a softer economic environment, renewed momentum is emerging among both investors and occupiers, with increasingly strategic decision-making evident across the market.