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Wellington Office Market Report

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 BNZ to reduce office space by 30% 

Today it was announced that the Bank of New Zealand has cut its corporate office space by 30 per cent after a permanent shift to a hybrid working model where its nearly 5000 staff work either two or three days from home.

BNZ chief financial officer Peter MacGillivray said the move had allowed the bank to consolidate its Auckland corporate premises down from three to two. “In Auckland, we have been in three buildings and were able to exit one of those – 125 Queen St. We have reduced that down and it has worked incredibly well.” In Wellington, it was consolidating its workers into a couple of spaces including a new building in Whitmore St. “We are in about three or four different buildings in Wellington so we will be able to reduce a lot of our space and consolidate the team into a couple of buildings.”

Despite this the office leasing market sub 500 square metres in Wellington continues to bounce back in 2021 and is now steady. The rush to sub lease, which was anticipated moving into 2021,  has yet to eventuate. Tenants are maintaining a “steady as she goes” approach and retaining their office tenancy for the meantime, even though in some cases the tenancy is only fully occupied once or twice a  week as the employees work from home. 

New listings are at the same rate as 2019 and the vacancy rate is stable and should remain roughly the same throughout the year. Current estimates are around 10%  vacancy rate. 

Tenant enquiry to date has been good and but 2021 will be a further challenging year for companies as they grapple with the “new normal” of Covid and try to establish suitable office staffing levels 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.   

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. May 7th 2021 (all rental figures in this report refer to gross rentals ex gst)