Vacancy expected to increase further by year-end

• The overall vacancy rate increased to 13.8% from 8.8% (+580 bps) for H1 2025. This comprises a Prime vacancy rate of 7.2% (+220 bps compared with Q4 2024) and a Secondary vacancy rate of 17.1% (+760 bps compared with Q4 2024).
• Lower government-sector office demand, combined with various refurbishment projects nearing completion, will likely drive vacancy rates upward across all property grades. We currently project the overall vacancy rate to reach 17.2% by 2028.

Significant increase in supply expected over the next two years

• Approximately 160,000 sqm of office space is under construction, refurbishment, seismic strengthening or in planning stages in the capital’s CBD.
• A number of Prime and Secondary buildings are under refurbishment/seismic strengthening and are expected to complete by 2027.

Stability in rents as occupier options rise

• Prime average gross and net rents remained unchanged at NZD 751 per sqm, p.a. and NZD 434 per sqm, p.a., respectively. Prime average gross rents are expected to increase only marginally by Q4 2025, by 0.7%.
• This is mainly due to a forecast increase in Prime OPEX having an impact on gross rents. Prime OPEX is expected to increase to NZD 323 per sqm, p.a. from the current figure of NZD 318 per sqm, p.a.

Outlook: Government expenditure to impact the capital’s office market

• Wellington’s commercial real estate market reflects the unique dynamics of New Zealand’s capital, where government activity drives underlying demand but also creates volatility through policy changes and public sector adjustments.
• The physical transformation of Wellington’s CBD continues through seismic strengthening and refurbishment programmes, progressively improving building quality and occupier appeal.