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Wellington Office Market Report
The office leasing market continues to bounce back since lock down and whilst vacancies have increased approximately 20% since the start of 2020. the office leasing market is still in good heart. There is a lack of tenants in the market at the moment but that is likely to change as tenants return and confirm their seating arrangements with their employees in 2021.
Contact Energy recently downsized from 4 floors to 3 floors leaving 1.1400m2 sqm for presumably 25% of their staff whilst the other 75% work from home. Reportedly some staff are arriving super early in order to grab a desk!
Statistics NZ have reported a healthy bounce back in NZ’s economic activity which is very pleasing to note. GDP has risen by 14% (admittedly from a very low base) in the 3 months ending 30th September 2020. On a year to year basis (12 months ending 30th September), New Zealand has only dropped 2.2% on the previous year, a far superior result to most of our OCED cousins including our mate Australia. Unemployment has also recently dropped to 4.9%, a pleasing result.
Watching the Prada Cup yacht racing teams racing recently (on tv) on a magnificent Waitemata Harbour on a glorious day with the crowds and city glistening in the background was a real treat. We surely do live in Paradise and are truly blessed with our situation here in New Zealand.
Well on that positive note, we can say hello to 2021 – a new exciting challenge for us all!
Tenant enquiry to date has been good and I still get the feeling this will be a further challenging year for companies as they grapple with the Covid Control climate and what staffing levels they actually need to be in the office going forward.
Some tenants are still persisting with asking for one month’s rent free per year of lease, however these days are long gone and landlords in todays market may grant one month’s rent free for a 3 year lease or 2 months rent free for a 6 year lease. In some cases they may also grant one month’s early access for setting up purposes only.
At this stage with the year hardly begun, it’s too early to call any notable trends for 2021.
I hope everyone has a happy and prosperous 2021.
Rental Update – Current average gross rentals per annum (ex gst) are CBD core: $350 – $750 sqm. TE ARO: $240 – $370 sqm THORNDON: $240 – $350 sqm.
Report written by Tom Burke. Owner. February 5th 2021 (all rental figures in this report refer to gross rentals ex gst)