New office building developments are
underway in Aucklands CBD with most construction focused near the waterfront in
the northern precincts of the central business district. This is due to a diminishing
supply of office spaces in the CBD and a growing trend of tenants relocating to
the northern areas of the CBD.
Aucklands CBD waterfront is enduring a stage of
commercial development. A large amount of new office spaces are currently in
design stages or are under construction in the area. The development was needed
in the city to cope with a rapidly diminishing supply of office spaces (Davidson, 2014) . There are multiple
developments underway including Manson TCLM’s
18,600sqm development on Victoria St, with large 3100sqm floor areas.
100,000sqm of office space is to be expected from all the developments in the
northern precincts of the CBD, with the majority of projects to be completed in
2015 (Taylor, 2014) .
The CBD is expanding in volume to accommodate the demand
for new office spaces. Throughout the CBD commercial properties have faced a
drop in vacancies. Downtown, the largest
northern precinct experienced a drop in vacancy of 16 percent to 12.4 percent. Other office buildings are now either full or nearly
fully leased (Davidson, 2014) . Most of the office
buildings currently under construction or planned for the CBD are located near
the waterfront. This reflects a growing trend of tenants migrating north that
has shown consistent in the CBD for many years. Over 80 per cent of prime grade
office space is now situated in its northern precincts (Taylor, 2014) .
The demand for new office spaces has
created a supply from development investors. Low vacancy rates and a relocating
tenant trend has created has created an ideal area of investment for
prospective developers. The demand for high quality premises has accompanied
the improvement in the economy; the economic improvement is pushing down
vacancy rates in the CBD's northern precincts (Davidson, 2014) .
Advice for Welly Real Estate would be to take advantage
of the tenant’s trend of moving further north towards the waterfront. Capitalising
on the commercial spaces for lease would be an area of investment worth
consideration. As the area becomes more popular with low vacancy rates the rentals
for occupied sites are likely to increase as the property value increases. Purchasing
or subletting a space within one of the new developments is likely to prove profitable
with the growing trend of northern CBD precincts enduring low vacancies.
Davidson, S. (2014, April). Bayleys' Office Leasing
Focus. Moving North for the Long Term, p. 4.
Taylor, C. (2014, April 9). CBD offices shifting to
waterfront. Retrieved April 11, 2014, from The New Zealand Herald:
http://www.nzherald.co.nz/commercial-property/news/article.cfm?c_id=28&objectid=11234572
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