Wellington office space trends for the second half of 2018

Since the November 2016 Kaikoura earthquake, office space in central Wellington has been in high demand. Back in March this year, independent valuation company, Telfer Young, described the Wellington CBD market as being “strong on the back of shortened supply, due to the impact of the Kaikoura earthquake. Good quality accommodation remains in short supply.” 

Stuff has reported this month that almost two years on, Wellington has seen the first shift in central office space vacancies (7.6% at the end of June 2018). It’s worth noting that safety is top of mind for prospective leasers – prime CBD market space (high seismic rated buildings) have 0.1% vacancies. Meanwhile, the secondary market, with lower EQC ratings have 10.6% vacant space.

In the past 12 months, two new buildings have been completed in the city which has helped ease pressure – 20 Customhouse Quay and the PWC Centre.

Other trends in the Wellington CBD leasing market include:

• Smaller floor areas needed with more agile workspaces being utilised
• Renewal of leases by current occupiers with alternative office space in short supply
• Low vacancy rates and high rents will attract more investors to the region

Wellington’s industrial real estate sector is seeing similar trends, while CBD retail vacancies are increasing, especially in the Lambton Quay area.

Source: Telfer Young, March 2018, https://telferyoung.com/our-offices/wellington/news-and-publications/wellington-market-insight-commercial-office-march-2018/