New Zealand's largest listed office landlord has delivered record earnings after finding the office vacancy levels in Auckland and Wellington at historic lows.
AMP NZ Office Trust said top-grade CBD office space was so tight that Auckland's vacancy rate was running at just 4 per cent and Wellington's was lessthan 1 per cent.
The trust, with 11 buildings worth $882 million, said this was resulting in rising rentals and a robust property sector.
Trust executive manager Rob Lang said tenants had few options if they wanted to shift into new premises, with prime and A-grade space at an all-time premium.
Although the trust has no plans to develop any new office towers in Auckland, it will finish a $32 million Wellington redevelopment at 1 and 3 The Terrace next month.
The result for the nine months to March 31 showed clearly how the trust had prospered from the good times.
It earned $70 million from rent, 7 per cent higher than for the comparable period last year.
It earned a net surplus of $26.8 million, 4 per cent ahead of last year's earnings.
Lang predicted excellent revaluations, due out in June.
The trust's portfolio is undergoing reassessment and Lang said it pointed to expected good results on Wellington properties on The Terrace.
Just before Christmas, Lang said legal challenges against two completed Auckland property projects made the development climate extremely unfavourable.
The trust's last Auckland development was the PricewaterhouseCoopers Tower on the waterfront.
Lang cited the Pak 'N Save and Fox Outlet Centre, both on the North Shore, as examples of completed properties at the centre of long-running legal battles. Litigation against Fox has since ended and that centre remains open.
An appeal from Pak 'N Save's owner, Foodstuffs (Auckland), is due to be heard by the Supreme Court in Wellington in early June. In the meantime, the completed supermarket must remain shut.
Foodstuffs' rival, Progressive Enterprises, and retailer group Northcote Mainstreet brought legal action to keep the Wairau Rd store shut.
