Auckland office space vacancy rates are at record lows but major development work will push them up in the next few years, says an expert.
Chris Dibble, Colliers International's research and consulting director, said tenants and developers could see big changes coming.
"Overall vacancy rates have reached a record low 5.5 per cent. There is now less than 80,000sq m vacant," Dibble said of CBD office space. That is enough for only 5000 workers and around two to three years of capacity.
However, more building development will change that soon.
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"From now until late 2019, we forecast CBD vacant space to increase by 48 per cent from 80,000sq m to 118,500sq m." Dibble said.
Vacancy rates would rise to 7.5 per cent by mid-2020, before slowly reducing again, his forecasts show. More than 112,000sq m of new office space is expected to be completed during the next five years.
In the short term, rents are forecast to increase and incentives offered to tenants to lease space are forecast to decrease, given the demand and supply pressures.
Competition amongst many tenants all eyeing opportunities in 2019 was not ideal from a bargaining viewpoint.
The biggest new project planned and going ahead is the PWC Tower at Commercial Bay by Precinct Properties.
Plans for about 40,000sq m of development on the former NZME site between Wyndham St and Albert St is listed as being "on hold". The status of development plans is yet to be confirmed, Dibble's research showed. Owner Mansons TCLM planned offices, then apartments.