Rent free office space being offered in Christchurch

Landlords are willing to offer office space to the right tenants rent-free for a period, or contribute to their fit-out costs to bring them into the city. Photo / Christchurch Star

Commercial leasing agencies are seeing more incentives creeping into the market to bring tenants back into the central city.

Landlords are willing to offer office space to the right tenants rent-free for a period, or contribute to their fit-out costs to bring them in.

JLL commercial broker Nick Cape said tenants could now pick up A-grade central city office spaces for between $325-$375 per sq m.

It was up around the $400-$420 per sq m mark when the first buildings were popping up following the earthquakes, he said.

He said most incentives were being offered to tenants signing for long-term leases.

That included rent-free for a period, or landlords offering to contribute to fit-out costs, he said.

"It's a tenant's market."

Colliers International Christchurch commercial leasing director Brynn Burrows said landlords would consider doing deals for the "right tenant".

"We're certainly seeing incentives creep into the market. There's not the massive oversupply that everyone was predicting, but there is an oversupply and developers are really keen to get the balance of their buildings leased," he said.

"Once the new builds were initially done, it was certainly higher [rent] and incentives were non-existent. It really is on a case-by-case basis."

He said the first wave of demand, which consisted of large international firms such as Deloitte, had moved back into the central city, and they were seeing the second wave come through now.

That consisted of strong local practices that had been around a long time, which were coming to the end of their current leases and now able to see where the "big players" were, he said.

Some other practices or businesses had moved into temporary premises and fitted them out for about 10 years, which could be an expensive process, so they did not want to move out yet, he said.

"Consequently, they [landlords] are doing a deal normally in the form of rent-free and that's just to assist that cash flow at a time when they're having to walk away from a fit-out which is probably only half its life and then reinvest in a brand new fit-out."

Mr Burrows said he expected to see current empty office space be snapped up within the next 12-18 months.

City councillor Jamie Gough said there was an over supply of central city office space and a lack of tenancies.

"Landlords are almost having a race to the bottom with respect to rents, and some of the incentives being offered are as generous as they have ever been."