The PwC Tower (left) has a zero vacancy factor. Photo / Michael Craig
Don’t call them ghost towers any longer because the chief of a billionaire landlord and a research boss have cited rising numbers of workers back in Auckland’s heart.
On Monday, Precinct Properties chief executive Scott Pritchard talked of office popularity soaring, “work from work” being the latest trend and a study of lift movement in buildings showing many of the approximately 10,000 people on two waterfront blocks returning Monday to Friday.
Gavin Read, JLL research head, backed that up, saying research his business released in May showed Auckland office block vacancies had dropped, as more people returned to work, commercial space made a comeback and more leasing deals were struck.
Last year, the Herald reported on three big blocks with many empty floors. The ex-Chorus House at 66 Wyndham St was then 59 per cent empty, the former Lumley Centre at 88 Shortland St was 30 per cent empty and the ANZ Centre on Albert St was 22 per cent empty.
But JLL’s most recent survey found 66 Wyndham only 47 per cent vacant in this year’s first quarter, the ex-Lumley Centre now called Shortland and Fort only 5 per cent vacant and the ANZ Centre on Albert St just 7 per cent vacant.
Precinct sold half the ANZ skyscraper on the Albert/Swanson corner to giant American business Invesco in a deal struck in 2018, then the other half to Reco Augustine Private in a deal the Overseas Investment Office approved in early 2021.
Regardless of tower ownership, Read said space was constantly being leased in Auckland’s towers.
Vacancy in premium and A-grade buildings is falling in the city’s core CBD and Wynyard Quarter areas.
“Since JLL’s 3Q22 vertical vacancy review, prime (premium and A-grade) vacancies within Auckland’s CBD decreased by 166 bps to 8.1 per cent from 9.7 per cent. This represents an uptake of an additional approximately 9200sqm of space. Importantly, 10 out of the 26 buildings in the precinct have zero per cent vacancy,” Read said.
CBD towers with no vacancy were listed as the 39,000sq m PwC Tower, Alberts at 1 Albert St (previously called the West Plaza) with 8500sq m, East Building northern tower with 13,800sq m, East Building southern tower with 16,300sq m, Westpac Charter with 8000sq m and BNZ on Queen St with 7761sq m.
More than half of 45 currently tenantable office towers in Auckland’s CBD and Wynyard Quarter are now fully occupied.
During this year’s first quarter, average net rents in the wider prime sector jumped by $10 per square metre, to $558/sq m Read found.
Premium building rents have now hit record new highs of $850/sq m, he said.
But Pritchard told the Herald this month of some smaller premium office suites within the refurbished 1 Queen St going for $1000/sq m.
Read said alongside these rent increases, he expects to see incentives for prime properties fall from 14.6 per cent to 10.4 per cent - the difference of about half a month’s free rent.
Three office buildings are under construction in the CBD. They will add a further 53,000sq m of prime space by 2025.
“When completed, we forecast an increase in vacancies in properties on the border of A-grade and upper end of B-grade assets, as more and more organisations compete to secure prime offices,” Read said.
The next vacancy report is now being finalised and will be released in early August.
He is yet to look at the final numbers to see if vacancies have fallen further in the last few months. But he says businesses want better offices generally.
“The flight to quality phenomenon continues to be the driving dynamic of Auckland’s office market. Despite a steady pipeline of prime new space in the CBD and Wynyard Quarter, we expect prime vacancy to remain stable at around 10 per cent through the rest of the year as businesses continue to seek to upgrade their premises to retain and attract staff.
“This has already served to increase daily footfall in the city, as workers return to spending more time working from the office rather than at home. And with the CRL drawing ever closer, we’re also seeing confidence return in the retail sector with a marked increase in leasing activity,” Read said today.
Prime Wynyard Quarter vacancies decreased from 4.1 per cent to 3.1 per cent, representing an uptake of 2465sq m of space since JLL’s last review in the second half of 2022.
Buildings filling up included 22 Viaduct Harbour Ave and 34 Sale St. Significant moves include Ricoh taking up a full floor at 34 Sale St, and Visa moving into 22 Viaduct Harbour Ave to take up about 3500sq m of office space, JLL’s review said.
Precinct’s Wynyard Quayside is three buildings: 117 Pakenham St with 8700sq m, 124 Halsey St with 9700sq m and 126 Halsey St or The Flowers Building.
Beca will lease 14,000sq m across five floors within this development, expected to complete by 2025. Floorplates will be around 2900sq m each.
Pritchard said on July 3 construction of new six-star rated offices for about 1400 Beca staff leaving Pitt St for Wynyard Quayside had reached level four of eight levels.
Hawkins was well advanced on the job for Beca and other tenants fronting Halsey St on the waterfront, he said.
Three interconnected buildings are rising at 124 Halsey St and 117 Pakenham St. The site is now a network of scaffolding and steel framing but will eventually rise from five to eight levels across the site.
The three new buildings are expected to be worth around $240 million once completed, Pritchard said earlier this month.
Completion was expected by 2025′s first quarter.
Annual net rents of around $600/sq m were being achieved on the development, he said.
“What we’re seeing in the market is companies like Beca and other professional services firms are really seeking very high sustainability credentials from their buildings and the buildings are part of their organisation’s strategy and this requirement for sustainability is really high.”
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
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