The latest vacancy survey by Bayleys Research reveals that the Southern Corridor running from Greenlane to Penrose has the lowest vacancy level of the main office markets in the Auckland region while the city fringe reported the highest vacancies.
The results of the survey, conducted earlier this year, show that the Southern Corridor had a vacancy rate of 6.8 per cent and the North Shore 11 per cent. The Auckland CBD recorded a 12 per cent vacancy while the city fringe exhibited a vacancy rate of 15 per cent.
Writing in Bayleys' latest Total Property publication, Sarah Davidson, analyst for Bayleys Research, says demand for office accommodation in the Southern Corridor has grown significantly over the past year, pushing the vacancy rate down over three percentage points.
"Total net absorption of 3300 square metres of space and very little completed new development, proved a positive combination for the precinct," Davidson says. "The Southern Corridor area continues to be popular with tenants because of its central position, excellent motorway access and attractive parking and occupancy costs."
The positive absorption in the Southern Corridor was mostly spread across smaller tenancies, says Davidson. The limited uptake of big tracts in floor space included 1500sq m leased in Unisys House at 650 Great South Road and the tenanting of 900sq m in Goodman Property Trust's Central Park development.
Central Park, at the southern end of Southern Corridor, is getting an A grade boost to space with the development of Seven Central Park. The building will comprise four floors of up to 1400sq m each, in keeping with the large open plan floor plates which are particularly popular in this precinct. The building, due for completion in July 2013, will add about 5500sq m to the Southern Corridor's total office inventory.
Goodman, the largest owner and manager of business accommodation in the Southern Corridor precinct, began the development without any tenant commitment but Davidson says the complex struck an immediate chord with the market and is now fully leased ahead of completion to Genesis Energy and Restaurant Brands.
The North Shore office sector has consolidated after a strong increase in activity which pushed the overall vacancy rate down significantly from a post global financial crisis peak of 14.1 per cent to 11.2 per cent in the year to January 2012.
Since then varying vacancy increases across Akoranga/Northcote, Albany, Mairangi Bay, Browns Bay and Rosedale have been counter-balanced by a continuing uptake of space in Takapuna. Being the largest office precinct on the North Shore by some margin, movements in Taka-puna's office market have a significant effect on the overall vacancy rate, says Davidson. Its rate of vacancy now sits at 9.3 per cent down from 12.2 per cent in 2012.
Two significant leases contributed to the large reduction in empty office space. At Smales Farm, the biggest office park in Takapuna, 2 floors in the TelstraClear building, totalling nearly 3000sq m, were leased to Number One Shoes and Auckland Transport. At 521 Lake Road, direct marketing, import and distribution company Brand Developers took over the balance of this building, which was previously vacant, totalling 5600sq m. Further uptake in Como Tower has also helped to reduce Takapuna's office vacancy.
Subject: Office vacancy rates.
Conducted by: Bayleys Research.
Results: Southern Corridor had lowest vacancy rate.
City fringe areas have highest vacancy rate.
North Shore "consolidating".