Current building activity could create 100,000sq m of office space.
The next wave of office development is under way in Auckland with much of it focused on land near the waterfront in the central business district, says John Church, Bayleys general manager commercial and industrial.
In his introduction to Bayleys' latest Office Leasing Focus publication, Church says developers are responding to the rapidly diminishing supply of quality office accommodation in Auckland with a flurry of new developments either under construction or in the planning stages.
These projects include:
• Manson TCLM's latest speculative 18,600sq m development at 151 Victoria St, with massive 3100sq m floor areas.
• Fletcher and Goodman's new Fonterra 16,000sq m head office building in Fanshawe St, opposite Victoria Park, with further commercial development proposed for this site.
• Precinct Properties' redevelopment of the Downtown Shopping Centre and its proposal to build five new office buildings in the Wynyard Quarter, with further office premises also planned for this precinct.
• Goodman's 6255sq m five level One Central Park building in the Southern Corridor.
• DNZ Property's development of up to 4000sq m of office space at 39-41 Corinthian Drive, Albany.
"These developments could potentially create more than 100,000sq m of much needed high quality office space and will increase the options available to companies with the luxury of being able to plan well ahead for their future business accommodation requirements," says Church.
"However, because of the long construction lead times involved in constructing large office buildings, the reality is that the options for businesses looking to relocate before the end of 2015 will be limited - and increasingly so as demand continues to outstrip supply." Sarah Davidson, Bayleys Research analyst, says in a market overview published in Office Leasing Focus that most of the office buildings currently under construction or planned in the CBD are located near the waterfront which reflects a northward migration of tenants that has been a consistent trend in the Auckland CBD office market for a number of years.
"Better utilisation of waterfront spaces is a global phenomenon," says Davidson. "The concentration of development activity at the waterfront end of the Auckland CBD means that over 80 per cent of prime grade office space is now situated in its northern precincts."
Davidson says the resumption of demand for high quality premises that has accompanied the improvement in the economy is pushing down vacancy rates in the CBD's northern precincts. In Bayleys Research's latest January 2014 CBD vacancy survey, the Britomart office precinct had the CBD's lowest vacancy rate at just 1.1 per cent. Davidson says the master-planned development by Cooper and Company has meant that the Britomart, formerly dominated by underutilised quay side buildings, now provides a good supply of premium and A-grade space, as well as beautified character space, for both office users and retailers.
The Viaduct is another location which has experienced reducing vacancy over the last 12 months, down from 7.2 per cent to 5.5 per cent while Victoria Quarter is down 1.2 percentage points mainly due to uptake of speculative office space in the Oracle Building at 162 Victoria St West, a Manson TCLM development that is now fully leased.
Downtown, the largest northern precinct, experienced a drop in vacancy of nearly four percentage points to 12.4 per cent and quality buildings are now either full or close to being fully leased, says Davidson.