New high-end office space to break drought

Artist's concept of the St George Corporate Centre at 96 St Georges Bay Rd.

CBRE Research predicts almost 80,000sq m of high end space will become available in the Auckland CBD over the next 18 months.

This will break a veritable drought in quality office space, one which has afflicted the inner city for almost 10 years, the research adds.

There was almost zero addition to prime CBD office space in the two years ahead of the NZME building opening at 2 Graham St last November, says the CBRE New Zealand research manager, Gergely Gaspardy.

"In fact, the combination of fewer options and heavier occupier demand meant high-quality vacancy decreased to just 1.4 per cent by the end of last year - the lowest level since December 2007," he says.

But over the next 18 months or so, about 60,000sq m of prime CBD office space would come on stream, through a combination of new developments and major refurbishment projects.

"This will be supplemented by an additional 20,000sq m of high quality "backfill" - the useful space relocating occupiers leave behind them.

"Although the word 'shortage' is rightly be used to describe the state of residential property in Auckland, prime quality office accommodation in the CBD can easily be characterised the same way.

"But completion of the NZME building signalled decisive progress, adding 18,000sq m of new high-end office space to the market.

"Strength of demand is illustrated by the fact that upon completion, all but one level of this new building was absorbed by occupiers."

Gaspardy expects that the additional office space coming on stream won't dampen demand for long.

"First, many of the new options are located either at the waterfront or in the core CBD - areas occupiers identify as the most suitable office locations.

"Second, about 60 per cent of occupiers prefer prime quality space, even when higher price is taken into account.

"Third, the new options offer a better range of accommodation types including: a high-rise tower in the core; large floorplate campus-style buildings in the fringes; and buildings that adopt latest workspace trends of combining core office space, with more flexible co-working space.

"Most importantly, we're predicting additional occupier activity because relocating to better quality premises increases staff productivity and helps attract and retain top talent."

Campbell Pritchard, CBRE's director advisory and transaction services office, says space coming on to the market includes 125 Queen St, a landmark building in the heart of the CBD. "Following a complete refurbishment that is delivering an A-grade quality building, whole-floor tenancies of 650-720sq m, and part-floor tenancies including small suites of 200-350sq m, are available here," he says. "Bespoke interior fit-outs and high-profile signage and naming rights are available, including a large scale LED display."

Pritchard says another new project which will increase office and retail space is the St George Corporate Centre at 96 St Georges Bay Rd.

"Now being built by Mansons, St George Corporate Centre is a building of the future and will offer unparalleled convenience in Auckland City's flourishing educational, commercial, transportation and business heartland," says Pritchard.

"With a five green star rating, the highest quality office and retail accommodation and an on-site café, this comprises four-levels of quality office space and two-levels of basement parking, all spread across 10,400 sq m of rentable office area.

"Mansons is creating an additional five green star-rated development at 46 Sale St which will dominate the cityscape in this emerging precinct.

"Programmed for completion in fourth quarter of 2017, this consists of seven floors of office accommodation, with secure car parking in the basement and additional long-term parking options available nearby.

"The net lettable area is about 11,350sq m, with large efficient floor plates of 1700sq m (on levels 1-6) and 1150sq m on the ground floor."