Kiwi re-signs Vero in CBD awash with space

Rising Auckland CBD office vacancy rates have not dented the confidence of one big landlord.

Kiwi Income Property Trust said yesterday it had struck a new nine-year lease agreement with Vero Insurance in its 39-level Vero Centre in Shortland St.

However, the trust reports that the tower's valuation dropped from $334,000 to $300,000 in the year to April 1.

Vero will continue to keep naming rights. But it will lease just 7 levels of the tower - two levels less than it had previously.

Chris Gudgeon, chief executive of Kiwi's manager, said Vero had signed up for9607sq m.

A number of firms work from the block including Russell McVeagh, Bell Gully, ABN Amro, Goldman Sachs JBWere and Deutsche Bank New Zealand.

The deal comes just after property consultants CB Richard Ellis found looming office vacancy levels in Auckland's CBD. The central area had enough empty offices for more than 6000 people, CBRE said.

Rents are coming under pressure as more space comes on to the market. Two large towers are also nearing completion: Brookfield Multiplex's new 80 Queen St and AMP NZ Office Trust's refurbishment of 21 Queen St.

The first part of 80 Queen St will be finished this year and that building has been leased. AMP says it will announce office tenants for 21 Queen St, standing in Queen Elizabeth II Square, before its completion date around September.

Dick Smith Electronics has leased ground-floor retail areas of that block.