Published 10 May 2006
Jones Lang LaSalle’s new research manager, Kim Bannon, put the case for a new office tower in Auckland’s cbd last Thursday, at the consultancy’s executive breakfast (which, through a mishap, I was unable to attend).
In the JLL white paper, Ms Bannon told about 100 clients:
“We believe the time is right for a developer/landlord to consider launching a new premium A grade office development.
“Current premium A grader rents are between $350-480/mÂ² net. For a new tower block to be viable, an average floor rental of $420-540/mÂ² is required (at completion in mid-2009).
“To achieve this rent by mid-2009, average rental growth of 5%/year is required. In comparison, rental growth over the last 3 years has averaged 6%.
“Demand for office space is forecast to continue to grow, as it has done historically since 1992. The last 4 years saw the absorption of 107,000mÂ². We are forecasting 80-110,000mÂ² in the next 4 years.
“143,000mÂ² are forecast to be developed & become available in the next 4 years.
“Based on this forecast supply & demand, average vacancy rates over the next 4 years are estimated to be 10-11%. This compares favourably to average vacancy rates of 12% in the last 4 years, an environment which saw rental growth in excess of what is required to achieve an average annual rental of $480/mÂ² net mid-2009.”
I’ll have more on this topic in Friday’s newsletter.
Attribution: JLL white paper, story written by Bob Dey for this website.