Supply squeeze pushes rentals up

55 Corinthian Drive

Office space available for lease on the North Shore remains in very tight supply with little better quality accommodation available for occupation.

Bayleys Research’s latest survey of office precincts in Takapuna, Akoranga/Northcote, Wairau Valley, Albany, Rosedale, Mairangi Bay and Browns Bay shows the overall office vacancy rate for the North Shore sits at 5.4%, little changed from 12 months ago.

Bayleys North Shore Commercial general manager Daniel Henderson says this figure is below the Shore’s historical average vacancy rate and is indicative of a shortage of office accommodation, particularly for good quality premises.

“Conditions within the Takapuna market have tightened considerably with pockets of long standing vacancies being leased and little space above 700m2 now available,” he says. “Better quality leasing opportunities in the Albany Basin are also few and far between. The only new office development currently underway is 55 Corinthian Drive (6,500m2) due for completion mid-2020 and largely pre-committed.”

Henderson the supply shortage is pushing rentals up across most parts of the North Shore with the best quality office space in Takapuna and Albany being generally leased at between $275 and $350 per sq m and from $210-$275 per sq m for secondary space. Operating expenses (including utility services, insurance and rates), which tenants pay in most leases, are higher in Takapuna at $60-$95 per sq m than in Albany where they range from $50-$75 per sq m.

Car parking in office buildings is also considerably more expensive in Takapuna at $35-$60 per space per week than in Albany where it mostly sits at $15-35 per week.
Exacerbating the supply shortage on the North Shore office market has been the increase in leasing activity over the past 6-12 months amongst existing tenants as well as new players, says Henderson. These include Comworth Group, Penguin Random and Fuel 50 in Takapuna plus Plan B and Auckland Transport in Albany.

No new office development is currently underway although a number of opportunities exist, says Henderson. These include the redevelopment of the former Takapuna Council building at 1 The Strand, Takapuna. Although the Council’s lease runs for another couple of years, it has almost fully vacated the premises and sub-leased part of the space to a number of large office tenants.

Henderson says the Hong Kong based owner of the 10,000sq m-plus property has yet to announce plans for the site. “In light of the current shortage of quality office space in Takapuna, coupled with the property’s central location and proximity to the beach, any future upgrade of the building is likely to attract a wide range of tenant interest.”