Clear preference for quality and location

• The overall Auckland CBD vacancy rate stood at 15.2% for Q4 (representing vacant space of 203,206 sqm), increasing from 14.8% between June and December 2024. Prime and Secondary office space increased to 10.3% (+60 bps) and 20.6% (+50 bps) respectively.
• This is above the long-term averages and reflects the wider economic environment. We forecast the overall vacancy rate to increase between 100 bps and 180 bps in the short- to medium-term as large-scale projects are delivered and major occupiers continue to right-size.

Increase in supply will provide more occupier options

• Total office accommodation in the Auckland CBD increased to 1.33 million sqm (+55,160 sqm) during 2024. By contrast, total supply was relatively stable between 2013 to 2022, with new construction balanced by the removal of obsolete and change-of-use Secondary stock.
• There is approximately 124,000 sqm of space under construction and refurbishment in the Auckland CBD. Major developments include Precinct Properties’ Wynyard Quarter at 124 Halsey Street for Beca, and 30 Daldy Street anchored by OneNZ.

Increases in rents for better quality and location of office space

• CBD Prime net face rents continue to rise, albeit at a slower rate than in previous years. This is mainly due to an increase in overall vacancy and continued availability in lower floors at the lower end of Grade A properties that are pulling down the average.
• Rents for Secondary properties remained unchanged for the fourth consecutive quarter at NZD 283 per sqm p.a. They are forecast to increase only marginally during 2025.

Outlook: Investment activity poised to rise after dearth of activity

• Investment activity has been hampered by the high interest rate environment. Investment volumes remain around 40% to 50% below recent 2021 peaks. The Auckland CBD Office market accounted for just 3.1% of transaction activity during 2024.
• Auckland’s market shows signs of increasing activity levels, with a tangible uptick in demand for high-quality office spaces, albeit balanced with increasing levels of new supply. Efforts to consolidate and optimise office spaces are expected to stir activity.