KEY POINTS:
Commercial office rents have jumped by as much as 30 per cent in the last year, putting pressure on employers to squeeze more people into smaller spaces.
Property consultants DTZ released New Zealand commercial rent figures in its global office occupancy costs survey this week, and found office blocks in Auckland, Wellington and Christchurch had become far more expensive to rent.
Auckland office workers cost nearly $10,000 each annually to accommodate in an office block, and that cost is rising fast. A year ago each worker cost just $7000 for their Auckland office space.
Ian Mitchell, DTZ's national research director, predicted employers would need to squeeze more office workers into the city blocks to save money.
"The office market enjoyed a buoyant year in 2007 but the shortage of space, particularly in Auckland, will force employers to use space more intensively," he said.
The other option to save on costs might be to move people out of the central business district and into fringe city or outer areas where rents are lower, in some places half the price, he said.
"Employers might seek lower-cost alternatives."
The results of DTZ's survey on office occupancy costs were good news for property owners because their rents were up, but bad news for businesses leasing office space which had to pay more, Mitchell said.
DTZ found that office building rents spiralled up more than a quarter in Auckland, Wellington and Christchurch in the past year.
Auckland rents are the most crippling, rising 30.5 per cent to an average $9755 an office worker. Wellington rents were up 27.5 per cent to $7632 a worker and Christchurch costs rose 20.4 per cent to $5276 a worker.
The world's most expensive offices are in London's West End, where it costs around $38,233 to accommodate one office worker. And although Auckland ranks 68th out of 137, the city jumped five places within 12 months.
Predictions are that Aucklanders will get less work space.
Mitchell said Auckland workers' area allowance might fall from an average 18sq m to just 15sq m each in the next few years.
The bigger the organisation or company, the less room the worker had, he said. More luxurious high-tech towers cost more to rent and space was at a premium.
PricewaterhouseCoopers Tower and Vero Centre in Auckland are two of the country's most expensive offices, costing about $500 a square metre annually.
Rising rents could make it more attractive for developers to build more office towers, Mitchell said. Commercial development was now concentrated in the Britomart precinct, Quay Park and Viaduct areas.
MOST EXPENSIVE
Cost per worker:
1. West End London: $38,000
2. Hong Kong: $33,000
3. London City: $25,387
4. Paris: $25,067
5. Tokyo: $22,614
6. Dublin: $22,245
7. Midtown New York: $20,871
8. Palo Alto, California $20,699
10. Oslo: $20,540
WHERE WE RANK
(out of 137 cities)
69: Auckland: $9755
91: Wellington: $7632
122: Christchurch: $5276
