Akl office vacancies tipped to top 10pc

The amount of empty floor space in Auckland is expected to rise. Photo / Supplied

Double-digit vacancy rates are being forecast for Auckland offices.

Alan McMahon, research and consulting director of Colliers International, has today issued a report saying vacancies were already up on last year but he expects the amount of empty floorspace to rise.

"Wellington and Auckland CBD's are holding up quite well to date but we forecast double digit vacancy in both centres as the crop of new buildings under construction are filled," he said.

Auckland city fringe vacancies have risen from 5.7 per cent last year to 6.3 per cent.

"More alarmingly, the North Shore's overall office vacancy was as low as the city fringe at the end of 2007 but has since shot up to 10.6 per cent, the highest since our surveys began in 1995," McMahon said.

Rising Wellington and Auckland office vacancies were good news for tenants but bad for landlords because they pointed to a period of static or falling rental levels and capital values, particularly for lower grade, poorly located properties.

The report included a paper from Jeremy Simpson, Forsyth Barr's senior investment analyst, which picked a patchy outlook for listed property trust and companies.

"There remains considerable uncertainties around how bad direct property values, vacancy and rental levels will get over the next 12 to 24 months. Listed property vehicles continue to divest assets and Kiwi Income Property Trust has been the first one to raise new equity.

"In this environment it is difficult for the listed property sector to rally, even with its very attractive yields relative to interest rates and an unprecedented level of risk premium already factored in."

McMahon summarised some of the biggest office sale and leasing deals lately. These were:

Valad Property Group sold Maritime Tower at 10 Customhouse Quay in Wellington to a private investor for $62 million on a yield of 6.77 per cent. The building was designed to achieve a minimum four-star green rating under the new Green Star NZ Office Existing Building Strategy.

Kiwi Income Property Trust sold BP House at 20 Customhouse Quay in Wellington to a private investor for $26.3 million on a yield of 7.3 per cent. The property includes 9140sq m of floor space leased to BP until 2030.

St Laurence Properties sold Oyster Property Group the Eagle Technology House at 135 Victoria St in Wellington for $23 million.

Robt Jones Holdings bought the former Public Trust Building at 117-119 Lambton Quay from DNZ Property Group for $19 million on an 8.46 per cent yield.

Kermadec Property Fund leased 469sq m of office space at Auckland's 7 City Rd to I-Data Resolutions for $169,324 a year.

Express Couriers leased 400sq m of office space in the Eden 1 building at Eden Business Park on Auckland's Enfield St from Orchard NZ.

Robt Jones Holdings leased 677sq m of office space at 191 Queen St in Auckland to JTB New Zealand for $236,437 per annum including carpark rental for six years.

AMP Chambers at 187 Featherston St was sold to a private investor by AMP Capital Investors for $12.6 million.

Man Automotive Imports leased 1280sq m office and 350sq m retail space at 5 Aerovista Place in Wiri from Lankell Investments for $130,000 a year on a six-year term.