A high-rise Auckland office tower, which once drew a major trading bank and allowed public viewing from its top, is half-empty, agents advertising floors throughout the block for lease.
Chris Dibble, head of research for New Zealand and strategic consultancy for Auckland at realtors JLL, has released the latest studyof office vacancies.
Research highlighted two buildings lacking tenants.
The former BNZ building at 125 Queen St is more than 50% vacant.
The biggest partly vacant office block is the QBE Centre, once called the BNZ Centre, at 125 Queen St opposite the end of Shortland St, with a New World Metro in its basement.
Vacancy for core CBD A-grade buildings stands at 16.7%, up 70bps from 1Q24, with 2209sq m of additional space available for lease.
Vacancy for prime quality premises in the Viaduct precinct is at 6%, unchanged since 1Q24.
“This signifies an availability of 14,371sq m of three space across six buildings, with 13 out of the 20 buildings fully leased,” the study found.
“My view around the Auckland CBD office market is that it’s become quite clearly divided into premium, A-grade and lower. That premises have the right credentials in this higher vacancy market. Occupiers have more choice. Cost is always a consideration,” Dibble said.
“One of the other key things we’re seeing is the importance of sustainability and green-star ratings, so premises with those credentials are now performing.
Chris Dibble of JLL has released the latest office vacancy report.
“Smaller floor plates restrict the type of occupier so we’re seeing a number of older premises like this. This doesn’t mean there isn’t demand. But it requires more occupiers to fill up the space which can take time.”
The building at 125 Queen St is owned by Invesco and has floor plates around 700sq m. Around nine floors are fully vacant, while space is for lease on parts of the remaining floors.
“Around half of the premises is occupied, so we wouldn’t say it is a ‘ghost’ tower, rather a premises that is poised to take advantage of improving market conditions,” Dibble stressed.
In 2018, the Overseas Investment Office granted consent for NZRE Corgi to buy 125 Queen St for $214m. NZRE Corgi was 54% American, 17% Swis, 9% Dutch, 5% British, 5% Germany and the rest in Singapore, Hong Kong, Canadian and Luxemborg hands.The vendor was Special Situations Assets: 54% American and 36% Australian.
Dibble said a significant refurbishment had taken place at The Formery on Albert St.
“Vacancy is also in the 50%+ band, however, we expect leasing activity to increase now that occupiers can appreciate what is on offer. This project is a similar market offering to 1 Albert St, that has also had a significant uplift in occupation upon product completion,” Dibble said.
Overall, he said tenants were moving within the CBD.
Many businesses wre looking for large floor plate premises with high sustainability ratings to reduce costs and meet increasing sustainability requirements.
“These are key reasons why the premium office sector is out-performing. A key driver of office space leasing activity amongst smaller floor plate premises is the small to medium-sized sector, especially the professional, scientific and technical services industry. As economic and financial conditions improve next year, as key surveys such as the NZIER’s QSBO and ANZ business outlook survey illustrate, we expect leasing activity to also improve. The opening of the City Rail Link, and other ongoing CBD improvements, will further underpin office leasing activity,” Dibble said.
Two years ago, the Heraldreported on the ex-Chorus House on Wyndham St being 59% empty, the former Lumley Centre on Shortland St being 30% empty and the ANZ Centre on Albert St being 22% empty.
But Dibble said much of that had changed lately, particularly with the Bank of China going to the Wyndham St premises.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
