Banks, Government, media sign biggest leases

KiwiBank is taking 2400sq m in One55Fanshawe, currently under construction by Mansons TCLM. Photo / Artist's Concept

Bayleys CBD leasing team has identified the biggest office leases signed in the Auckland market last year with 13 of those leases filling up about 58,000sq m of office space.

In its latest overview of the Auckland office market, Bayleys Research reports that ANZ was 2018's biggest lessee, signing up for 6740 sq m premises in Kiwi Income Property's new $80m office building nearing completion at the Sylvia Park Town Centre. ANZ will shift around 800 mainly call centre staff into five office floors on a nine-year lease.

Not far behind is NZ Police which is relocating from its longstanding Auckland central headquarters building on the corner of Vincent St and Cook St, having leased 6280 sq m of space with five above ground and two basement levels at 13-15 College Hill. NZ Police have indicated they will be moving into the refurbished building in mid-2019.

The Police just pipped financial services software provider Xero NZ which leased 6200 sq m as the anchor tenant of a new office building developed by Mansons TCLM at 99 St Georges Bay Rd, Parnell. The building was successfully syndicated last year by Bayleys on behalf of Augusta Funds Management.

Brendan Graves, team leader of Bayleys Auckland central office leasing division says Mansons' developed buildings had the most success in snaring big tenants in 2018 with the Automobile Association leasing 5000 sq m in its recently completed development at 46 Sale St and Southern Cross Health and KiwiBank taking 4650sq m and 2400sq m respectively in One55Fanshawe, currently under construction.

Government Department MBIE has leased 3500sq m at 167B Victoria St, one of four buildings in the Spark head office campus developed by Mansons.

Graves said despite the challenges and changes they are facing, media services companies were also represented on the top lessees' list. Media Works leased 4300sq m at 17 Hargreaves St, College Hill - the former Fuji Xerox building which is undergoing a major redevelopment by Mansons.

The DDB Group has also leased 3500 sq m in the top two floors of Giltrap Group's headquarters building at 119 Great North Rd, Grey Lynn which has a luxury car showroom at ground level.

Graves says most of the office space taken up is within new buildings along with some existing buildings that are being refurbished or redeveloped. "The leases have been fairly widely spread across various locations including the CBD and central city fringe but also in Penrose and Mt Wellington.

"This reflects a well-established trend of more big leases signed up outside of the CBD, although most of the substantial leases in Precinct Properties' Commercial Bay, currently the CBD's largest office development, were transacted prior to 2019."

Lloyd Budd, Bayleys Auckland's commercial and industrial director, says the amount of office accommodation the agency's leasing team found tenants for increased by 26 per cent in the agency's latest March financial year.

"This strong growth in our leasing volumes reflects a combination of continuing high levels of business activity and an increase in Bayleys' market share," Budd says. 'A continuing trend in the leasing market has been a definite flight to quality by a growing number of occupiers. Changes in workspace strategy and increased competition to attract and retain talent is resulting in more businesses upgrading their space requirements.

"As part of this process the green credentials for new buildings are becoming increasingly important with most projects seeking at least a Five Star green rating."

Budd says the demand for quality premises is likely to see rents at the upper end of the market continue to trend higher over the next year, with leasing incentives varying widely depending on the outcomes developers and landlords are seeking.

"Those developers seeking to off-load projects quickly upon, or even before, completion tend to offer greater inducements to would-be tenants while landlords with a longer-term perspective have been reducing their level of incentives."