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Office Market tightens

With Wellington now back in RED , office tenants are staying away from the CBD in their droves. Employers are understandingly encouraging their staff to stay home if they can, rather than risking the whole office getting Omicron and crippling the business in one foul swoop. Retailers including hospo, are taking a battering and the number of empty shops in key locations is growing.

The office market to date this year has remained steady and the latest reported CBD vacancy rate is between 6% and 7%, – 1% lower than 2021. In the late 1990’s the vacancy rate was 14-15% as a comparision.

Office leasing so far this year has started off at a brisk pace as tenants re- assess their requirements as their office lease comes up for renewal.

Office rents for quality refurbished CBD office suites are on the increase and are now in the $500 – $750m2 (gross) range – a level only dreamed about in past years.

The Omicron outbreak is on the move and remains a major risk to business in general in 2022 as well as a predicted inflation rate of 5-6%.

An update from across the ditch:

The Property Council of Australia CEO Ken Morrison says over the last six months, businesses across the country have decided working in a CBD office is “integral” to them. The Property Council on Thursday reported demand for office space were lifting in every Australian capital CBD, defying predictions of collapse.

“We have seen an increase in demand for office space over the last six months,” Mr Morrison told Sky News Business Editor Ross Greenwood. “So, I think the jury is in, CBD’s and office working is not dead, far from it; of course, we are seeing a lot of changes. “For everybody who cares about our CBD’s, this is good news because it means the economics underpinning our CBDs are actually very strong.”

{news courtesy of SKY News Australia)

Maybe this trend will follow in Wellington in the near future

Take care everyone and stay safe!

Rental Update – Current average gross rentals per annum (ex gst) are CBD core: $350 – $750m2. TE ARO: $240 – $400m2 THORNDON: $240 – $375m2.

Report written by Tom Burke. Owner. February 23rd 2022. (all rental figures in this report refer to gross rentals ex gst)

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