Vacancy is expected to increase as refurbishment projects are completed

• The overall vacancy rate increased to 17.2% in Q4 2025 from 8.8% in Q2 2025 (+840 bps). This comprises a prime vacancy rate of 8.5% (+130 bps compared with Q2 2025) and a secondary vacancy rate of 19.8% (+270 bps compared with Q2 2025).
• Lower government-sector office demand, combined with various refurbishment projects nearing completion, is likely to drive vacancy rates upward across all property grades. We currently project the overall vacancy rate to reach approximately 20.0% by 2028.

An increase in supply is expected over the next two years

• Approximately 147,100 sqm of office space is under construction, refurbishment, seismic strengthening or in planning stages in the capital’s CBD, with only 18,700 sqm of this space known to be pre-committed at this stage.
• Wellington City Council currently operates from a number of locations in the CBD, including 113–119 The Terrace, where it occupies circa 9,000 sqm. It plans to move in mid-2026 to lease space at Cornerstone’s 68 Jervois Quay, occupying the entirety of the building.

Net rents negatively impacted by OPEX increases

• Prime average gross rents increased marginally by 0.7% to now stand at NZD 756 per sqm p.a. However, there is a difference in the movements of premium and A-grade rents that constitutes this figure.
• Premium average gross rents increased by 1.8%, while A-grade average gross rents decreased by 0.8%. The former reflects an increase in OPEX driving gross rents up, while the latter is due to a continuing rise in vacancy in this grade.

Outlook: Dearth of transactions over the last two years

• Adaptation and resilience define Wellington’s commercial real estate market as we move through the year. Occupier demand, especially for lower-quality space, remains below average for now.
• Government sector adjustments, private sector rebalancing and the evolving needs of tenants are requiring both occupiers and investors to re-evaluate their strategies. History demonstrates the market’s capacity to adapt while navigating shifting priorities.