Archive | CBD office

Conversions & tenant moves help reduce office vacancy

2 factors affected office vacancy around Auckland in the second half of 2013 – withdrawal of space for conversion to apartments or hotels, and a number of moves around town by tenants shifting between grades or between business areas.

CBRE research director Zoltan Moricz said this week the cbd office vacancy level was still above 10%, but it had slipped below that line outside the cbd.

CBD vacancy climbed above 10% in mid-2009 and peaked at 14% across all grades at the end of 2011. Overall vacancy at the end of 2013 was 10.2% (145,618m²) after a 1.4% (20,862m²) decrease since June.

Mr Moricz said the combined premium & A grade vacancy had been cut from 6% to 4% over the 6 months, though vacancy in the premium segment had risen. The 12,332m² reduction was ascribed to:

  • law firm Russell McVeagh quitting 1237m² on level 29 of the Vero Centre
  • 391m² on levels 13 & 15 in the PWC Tower being taken up by new tenants
  • Almost 40% of the space in 205 Queen St vacated by the ANZ Bank being taken up by a number of tenants, including law firm Brookfields taking 1170m² on levels 8 & 9
  • Ricoh leasing the 2100m² former Mainzeal headquarters at 200 Victoria St West
  • 2 floors in the HSBC Building at 1 Queen St, 2118m² on levels 6 & 10, being leased
  • Kordia taking 1724m² on level 3 of Oracle House at 162 Victoria St West, and another telecommunications tenant taking 1721m² on level 1.

Mr Moricz said vacancy in the secondary grades decreased by an overall 0.9% (8530m²), though Brookfields added to it by moving across the road from its 2544m² on 4 floors of 19 Victoria St West. Other moves included the BNZ vacating 4398m² on lower floors of the former BNZ building, 125 Queen St, expansion by Auckland University into an extra 1990m² of 49-51 Symonds St, 1299m² of former Crystal Harbour restaurant space at 39 Market Place being taken up by Ignite Architects, and the entire 1072m² level 2 of 138 Halsey St being taken up by Sunday Punch.

Overall net absorption in the second half of 2013 was 11,102m², mostly due to 13,177m² of A grade space being taken up.

g cbre140130 cbd nonoffWithdrawals of office space from the market during the 6 months included 21 Federal St, 90 Symonds St & 60 Cook St for residential & hotel conversions, refurbishment at 85 Fort St and demolition of the building at 109 Fanshawe St to make way for the new Fonterra headquarters.

The non-cbd vacancy rate peaked at 13% (203,584m²) in December 2010, but was down to 9.5% (153,000m²) at the end of 2013.

Attribution: Agency report & interview.

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CBD vacancy down – but expect it to start rising again

Published 4 February 2011

Colliers International research director Alan McMahon said in a research report out today that office vacancy in the Auckland cbd had fallen to 9.6% while Wellington vacancy was – unusually – higher.

Premium grade in the Auckland cbd is back up to the level of 14.3% a year ago, the highest of any grade except D, and vacancy in the city’s green building stock is at 18.8%.

Mr McMahon said there were several reasons for that: “Firstly, the sample is small and the data therefore volatile. Secondly, green buildings tend to be new, in the premium category and come with high asking rents compared to all the other lower-grade options available.

“At a time when businesses are generally seeking to contain costs, the benefits of occupying a green building may seem less attractive than the benefits of saving rent in the short term. We expect that figure to reduce this year.”

Overall, Colliers’ researchers predict vacancy to start increasing: “We have, however, reduced our peak vacancy forecast due to changed assumptions about new supply and the increasing pace of demand. These are informed in part by more optimistic forecasts of employment growth. We now see Auckland cbd vacancy peaking at around 15% rather than the 18% we predicted previously.”

I’ll have more on the Colliers forecasts over the weekend.

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Attribution: Colliers release, story written by Bob Dey for the Bob Dey Property Report.

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CBD vacancy increases despite positive takeup

Published 21 January 2011

Your browser may not support display of this image.CB Richard Ellis says office vacancy in Auckland’s cbd has increased over the past 6 months, after improving in the first half of 2010.

The consultancy’s latest survey indicates that vacancy sits at 13.8% (190,000m²), an increase of 1% (20,000m²) over the past 6 months. Senior research director Zoltan Moricz said: “Although occupier demand continues to improve and net absorption was positive, vacancy increased because the introduction of new buildings resulted in supply exceeding demand.”

The most significant new building was the new 32,000m² Telecom headquarters at Victoria St, completed in October and progressively occupied through to the end of the year. Telecom occupies the whole building, but its departure from other premises resulted in substantial vacancy in other parts of the city, affecting both cbd & non-cbd submarkets.

Despite overall vacancy increasing, Mr Moricz said prime vacancy trends were favourable and the vacancy rate had fallen from 9.6% to 9.1%. Apart from Telecom’s move into its new premises, the prime sector benefited from Fonterra taking 4000m² of expansion space in the AXA building on Shortland St.

Vacancy in the secondary market (B, C & D grades) increased over the 6 months by 20,000m², from 14.7% to 16.9%, largely the result of the reintroduction of about 13,000m² of vacant space in 125 Queen St, and 7000m² in 92 Albert St becoming vacant as a result of Telecom’s relocation. Most of the vacancy impact of Telecom’s relocation has been outside the cbd, including Telecom House on Hereford St, which is in the Ponsonby-Grey Lynn precinct.

While the B grade sector has been severely impacted by increasing vacancy, C grade vacancy improved for the third consecutive period to partially offset this.

Despite increasing vacancy, net takeup of space over the 6 months was a positive 26,000m², which was largely driven by Telecom’s move. “This is the second consecutive survey there has been positive takeup after 4 consecutive surveys of negative takeup. Excluding the movements by Telecom, takeup of space is still positive and confirms a return to positive demand,” Mr Moricz said.

Following net positive takeup of 9000m² in the first half of the year, annual takeup for 2010 was a positive 35,000m². Prime takeup was positive and secondary would have been too, but for the Telecom impact.

2 other additions of office space were some refurbished character space in Britomart. The only withdrawal was at 127-129 Hobson St, which is being converted into Quest serviced apartments.  The net supply in the second half of the year was 46,000m².

Senior research analyst Craig Wong said suburban demand appeared to be weaker than in the cbd and vacancy had increased from 11.5% to 13.2%.

“The latest 6-month period recorded the largest occupancy losses since the mid-1990s. Although overall occupancy is weak, 2 important factors meant occupancy losses were greater than other 6-monthly periods over the past 2 years. Firstly, the largest single tenant (Telecom) in the non-cbd market relocated into the cbd and, secondly, there were no significant completions to drive any positive absorption to counteract wider market absorption losses.”

Mr Wong said the non-cbd market had been characterised by large takeup of new supply, with very little vacant backfill space being created in the process, resulting in significant positive net absorption, but in the second half of 2010 new supply (a negative 5630m² due to withdrawals) was the lowest since the mid-1990s.

“Other than Grey Lynn-Ponsonby, significant occupancy losses were also recorded on the North Shore, Eden Terrace & Newmarket. However, despite not experiencing significant occupancy losses over the past 6 months, Greenlane still has the most vacant space of the non-cbd office precincts at nearly 26,000m².”

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Which way for office rents?

Published 8 November 2010

CBRE research director Zoltan Moricz found himself out on a limb after producing a more positive market outlook than others for Auckland cbd office rents early this year, so he went back to test the modelling.

The questions: What gdp forecasts would produce a 10% decline in net effective rents between 2010-14? What rental growth projections result from the most pessimistic economic forecasts currently available?

“Others have been forecasting a big rental drop and I have been forecasting a steady rise in net effective rents from 2011 on,” he said. “That was based on a more positive economic environment, so we’ve gone back and tested the economic conditions and what would be the rental growth given the current more pessimistic economic forecasts, and what the economic contraction would have to be to get that 10% rental decline.”

The rental assessment in all cases is for the average for the combined A, B & C grades of office space. Mr Moricz has also assumed that the announced ASB Bank building in the Wynyard Quarter and the ANZ National Bank building proposed for Customs St will be built by 2013.

Rents fell about 3-3.5% this year, but to get a 2.5% decline in rent in 2012, the economic movement would have to be negative because there would be no new supply that year. To get a 10% decline over the 4-year period, “it would have to be a very pessimistic world view over an extended period. It would have to be more than the American economy, it would have to be world repercussions.”

CBRE changed its rent forecast methodology to a new model for its May outlook report: “This focuses on vacancy & gdp as the independent variables influencing rents, while incorporating an auto-regressive component to represent momentum. Rents from the previous period provide the base and then forecast levels of gdp & vacancy contribute to the change in rents. The contribution of each variable varies across quality grades, as each grade behaves slightly differently. Some further refinements have been made to the model since the release of the last report.

“The office rent forecasts produced by this model are on a limb in comparison to the industry consensus. Influenced by the economic forecasts as of April this year, whose consensus indicated a fairly strong rebound in gdp growth rates in 2010 & 2011, CBRE’s office rent forecast model showed the return of effective rental growth from 2011 onwards. By contrast, other property researchers project continuous rental declines through to 2014. Some are forecasting Auckland cbd office rents to decline by 10% or more to 2014, on top of the already substantial rental falls since mid-2008.”

The economic environment has deteriorated since May, with a softening in some growth indicators in New Zealand & elsewhere resulting in a significant deterioration in general sentiment towards the economic outlook. Mr Moricz said he remained confident in the integrity of CBRE’s forecast model based on its predictive capacity when applied to office rents during the past 20 years, but decided to retest given the significant differences in forecasts.

GDP’s influence

One of the underlying postulates of CBRE’s forecast model is that when vacancy is on the rise, gdp must improve to counteract this increase; otherwise rents will fall. However, there are exceptions when there is strong positive or negative momentum.

The chart of the latest gdp forecasts from a range of economists shows a range of 1.2-4.7% in 2011.  “Importantly, among the general fall in sentiment & growth projections, some of the economists (for example ANZ, Westpac & Infometrics) essentially still continue to project growth at the same (high) levels for 2011 they did earlier in the year.

“However, downward gdp revisions have been made, most notably by NZIER & the Reserve Bank. NZIER is especially negative on growth prospects through 2011, driven by factors such as cautious households, slow non-residential construction and low net migration. It should be noted though that NZIER does show growth picking up to match the consensus at 2.9% in 2012.

“The chart also shows the gdp growth adopted in CBRE’s May forecasts and, as can be seen, even now, they sit well within the range of economist gdp forecasts; close to the middle of the range excluding NZIER’s forecast.”  

Your browser may not support display of this image.What gdp forecasts would produce a 10% decline in net effective rents between 2010-14?

Mr Moricz said CBRE’s researchers approached this scenario on the basis of a 2.5%/year rental drop in each of the 4years to show an approximate 10% overall decline: “This is somewhat artificial and was done for the sake of simplicity because, even though we are not aware of the exact details & mechanics of our competitors’ forecasts, a straight-line rental decline over several years would be nonsensical given the economic, property supply & vacancy outlooks for individual years.

“Our model indicates that gdp will need to range from -1.3% to 0.4%/year in the next 4 years for the 2.5%/year effective rent declines. 2011 & 2013 require smaller gdp contractions as increased vacancy drives most of the decline. However, in 2012 & 2014, when vacancy is not increasing as much, if at all, deeper contractions in gdp are required.”

What rental growth projections result from the most pessimistic economic forecasts currently available?

NZIER is the most pessimistic for gdp growth. The most significant difference from the consensus is in 2011, with a forecast 1.2% gdp growth, compared to the 3.8% adopted in CBRE’s base forecast scenario in May. “Being such a significant change in the short term has a large bearing on our medium-term forecasts. Using the NZIER forecasts in our model, we predict a rental decrease in 2011 (-1.5% compared to 2.2% from our adopted gdp figures in our May report).

Your browser may not support display of this image.

“Rents in 2012-2013 will show improved growth. However, with adverse momentum from 2011, rent growth is more subdued than our base forecast scenario in the May report. By 2014, rents will still be around 11% below their 2008 peak levels and around 6% lower than those using gdp figures from the May report.”

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Attribution: Interview, CBRE research, story written by Bob Dey for the Bob Dey Property Report.

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Auckland cbd vacancy climbs to 11.5%

Published 17 December 2009

New cbd office vacancy data completed this week shows the Auckland vacancy rate up from 8.4% in June to 11.5% in December, in line with Colliers Research predictions.


Coliers Research director Alan McMahon said the later completion of Wellington’s current crop of new cbd stock explained why the vacancy rate there had increased from 6% to only 6.9%, but said that would climb substantially over the next 2 years.


“Prime vacancy in Wellington remains resilient at an amazing 0.1%. The problem is largely concentrated, for the moment, in C grade, which provides about 70,000m² of the 85,000m² of empty office space in the Wellington cbd.


“Auckland’s vacancy by grade is very different, thanks to the completion of 2 new prime buildings. Indeed, premium grade vacancy at 14.3% is higher than every other grade except D grade, which is at 22.5%, and hasn’t been below 20% for years.”


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Attribution: Agency release, story written by Bob Dey for the Bob Dey Property Report.

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Colliers picks double-digit office vacancy peaking in 2011

Published 24 April 2009

Colliers International has forecast a sharp rise in Auckland & Wellington office vacancy rates, hitting double digits in both cities and peaking in 2011 as the crop of new buildings under construction is filled.


Research director Alan McMahon said this week in the consultancy’s latest research: “In a world of reducing commercial property supply, demand & values, just about the only thing that hasn’t reduced is vacancy. The trend in vacancy levels is an early indicator of value movement, so while the overall Auckland city fringe vacancy rate is still quite low historically, the fact that it increased from 5.7% to 6.3% – an overall increase of 10% during 2008 – is significant.


“More alarmingly, the North Shore’s overall office vacancy was as low as the city fringe at the end of 2007 but has since shot up to 10.6%, the highest since our surveys began in 1995.


“This is good news for tenants but not for landlords. These rises indicate a period of static or falling rental & capital values, particularly for lower-grade & poorly located properties.”


On the question of when a turnaround might occur, Mr McMahon said: “We have looked at the correlation between various economic & property market indicators. One pair that shows strong correlation is unemployment & vacancy. Vacancy appears to lag the unemployment curve by about 2 years.


“NZIER’s expectation of unemployment peaking in 2009 backs up the output from our model, which forecasts vacancy peaking in 2011. The trend is likely to apply in most, if not all, New Zealand markets – whether defined by location or asset class – and suggests we are in for an extended period of higher vacancy around the country.”


Vacancy in Auckland’s very tight premium & A grade office stock climbed from 2.6% in June 2008 to 4.1% at the end of the year and is expected to double to 8.4% by the end of 2009.


“The risk of vacancy is a serious focus in the current market, whether in the context of a valuation, a bank finance application or a cashflow forecast by a prospective purchaser. Assumptions are for longer void periods, followed by more expensive incentives or fitout budgets than has been the norm for the past several years.”


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Attribution: Colliers release, story written by Bob Dey for the Bob Dey Property Report.

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CBRE research shows sales volume down 72%, below $1 billion for 2008

Published 5 March 2009

Commercial property sales in New Zealand’s 3 main centres stopped short of $1 billion (for sales over $5 million each) in 2008, down 72% from the previous year.


CB Richard Ellis research director Zoltan Moricz said today Auckland transactions historically made up about 76% of sales there, in Wellington and in Christchurch. Auckland’s property sales volume declined from $2.7 billion to $754 million, down 72%, but Wellington’s sales volume fell 77%, from $630 million to $143 million. The largest Wellington sale was of Sovereign House on Manners St, a 12-storey 1980s building sold by Prime PropertyGroup Ltd (Eyal Aharoni) to Anaro Investments Ltd (Ian Little & Natalie Evans) of Oamaru for $19.6 million.


The largest transaction of the year was excluded from calculations because it was an equity purchase. That was the Abu Dhabi Investment Authority’s $126 million purchase of a half share in AMP Capital Investors NZ Ltd’s Lion Brewery development site on Khyber Pass Rd, Newmarket.


The biggest transaction included in the sales analysis was the $43.5 million sale of the former Cook St council depot site in December, at a Bayleys mortgagee auction. This proved to be the property event of the year, drawing a huge crowd, including a number of notable buyers who were cut out of the bidding as the price escalated to around $1500/m² for the lessor’s interest in fringe cbd land.


Former owner Jamie Peters said before the auction the total on his interest was about $70 million, against a 2007 valuation gained of $96 million. Douglas Rikard-Bell, who had bought the lessee’s interest from Mr Peters to create the $2 billion mixed-use Rhubarb Lane development, already had Westpac NZ Ltd backing him and the bank was able to tie up both lessor’s & lessee’s interests in the auction outcome.


The number of sales in the 3 centres fell from 204 to 88. Mr Moricz said while that was a big fall, the 2008 figure was in line with transaction levels in the early 2000s. Auckland sales fell from 153 to 63, Wellington from 36 to 16. In Christchurch, sales volume was down from $157 million to $68 million and numbers down from 15 to 9.


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Attribution: CBRE release, story written by Bob Dey for the Bob Dey Property Report.

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US sends warning signals for NZ property market shifts

Published 25 February 2009

“We didn’t start the fire,” Colliers International research & consulting director Alan McMahon writes in his latest research report. But, like it or not, the flames are going to reach us anyway: “Just as economic events in the US illustrate the economic effects we can expect to experience, so current events in their property markets can provide early warning signals for our markets.”


Research just published by Colliers International in the US notes that around 3% negative office absorption is likely from peak to trough in this recession, in line with the level of assumed economic contraction. A 3% contraction there equates to over 9 million m². Across the US, an average of 5.9% of employees are (or were until recently) employed in the financial services sector. Notably that number is around 10% of all employees in Manhattan & San Francisco, where the office markets have been particularly hard hit. The overall national vacancy is expected to rise to 20% and downtown office rents to shrink by 25%.


“How does that compare to New Zealand? Our 2006 census records an overall percentage of employees in finance & insurance at a reassuringly low level of 2.8%, but of course it is higher in the main centres – Wellington 4.8% & Auckland 4%, for example.”


Net absorption in the Auckland cbd was negative in the second half of 2008, for the first time since 2003, representing a contraction of only 0.4%. “Even allowing for the under-representation of financial services workers in Auckland compared to the US, this suggests there is further contraction to come, particularly when the overall New Zealand economic contraction, estimated by economists at 3-4% from peak to trough, is taken into account.


“Perhaps more convincingly, empirical evidence gathered via knowledge of forthcoming lease expiries, and the intentions of those businesses, also points to further contraction and an increase in cbd vacancy. Current low levels of profitability illustrate that many categories of business, not just cbd office occupiers, will be looking for ways to control their property costs.”


In the Auckland cbd, vacancy in the prime & A grade office sectors has risen from 2.5% last June to 4.1%. Colliers’ rental index has steadily contracted, rising 14.8% over 24 months but only 0.8% in the last quarter of 2008. Colliers expects the index to fall by 2.5% in 2009 before coming back to balance in 2010.


The capital value index was negative for the second half of 2008 – down 1.7% – but lifted by 0.8% in the last 3 months. Mr McMahon expects that index to fall by 5.7% in 2009.


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Attribution: Colliers report, story written by Bob Dey for the Bob Dey Property Report.

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Past downturns produce heartening comparisons

Published 23 January 2009

CBRE research & consulting director Zoltan Moricz says the property sector can take heart from past downturns: Negative net absorption has not been a major feature.


Mr Moricz has gone back over the past 24 years of property statistics, focusing on the Auckland cbd’s office stock, and looked at a wide range of factors – supply, demand, rents & yields, and made some projections based on known supply.


[Photos below show some of the new city supply – 21 Queen St at top, then 80 Queen St, the Britomart developments and IAG].


He said supply had been the main factor driving vacancy and the response of rents varied according to the direction & speed of vacancy moves and the strength of demand. Yields could rise (weaken) even when interest rates were falling rapidly.


“While the relationships of property & economic variables during past cycles are not foolproof indicators of the way future cycles may unfold, they do provide useful precedents to draw on.”


Mr Moricz said net absorption of central Auckland office space had been negative in 5 of the past 24 years. There was a clear correlation between negative absorption and the economic recessions of 1991, 1998 & 2008, and the downturn in the private education sector in 2003 also resulted in a substantial reduction in demand.


Over the whole 24 years, the market had absorbed 700,000m² of office space, while in the 5 downturn years 65,000m² had been released.


“During both previous downturns the development cycle was in full swing, with substantial amounts of new space being completed. Some 175,000m² came on the market during 1990-91 and 78,000m² during 1998-99. Most of the increase in the vacant stock came from increased supply, as opposed to reductions in occupied stock.”


Mr Moricz said there was a common perception that there was an “equilibrium” level of vacancy: “When vacancies rise above this point rents are supposed to fall, and when vacancies fall below the equilibrium point rents should rise. In practice however, there is no such thing as a fixed equilibrium vacancy.


“In 1993, vacancies were around 20% when net effective rents bottomed out and started to increase. By contrast, during the late 1990s, rents started to fall when vacancies were at 11%.”


He said the ultimate size of the vacancy rate influenced the extent of rental rises and falls, but the lag in rental movement ranged from 6-18 months.


Turning to the present economic turmoil, Mr Moricz said net absorption had already turned negative in 2008 and was most likely to stay negative this year. Vacancy increased in all sectors last year and should continue to rise this year.


“However, given the importance of supply as the main driver of vacancy increases, the ultimate cyclical vacancy peak will be heavily influenced by the size of the construction pipeline. The cbd office supply line has ramped up in 2008 and has the largest & most sustained pipeline, with confirmed additions increasing total stock by around 9% – 108,000m² – to the end of 2011.


“Supply in non-cbd offices has been high in 2007 & 2008 and the momentum will be sustained through 2009. Confirmed supply will add 5% (60,000m²) to stock, but beyond 2009 the pipeline drops significantly.


“The industrial & retail supply pipelines are on a downward trend following earlier peaks. We expect that around 2-3% will be added to these markets during 2009 & 2010 – 175,000m² more of industrial space & 30,000m² of retail.”


Completions looming in 2009 are the BNZ’s 80 Queen St (fully leased), AMP’s complete gutting & refurbishment of 21 Queen St (not yet leased), IAG’s new office at the turn of Fanshawe into Sturdee St and the Westpac building at Britomart (some office space occupied, ground floor being finished).


Mr Moricz saw no buildings on the horizon for completion in 2010. In 2011, Westpac’s second building at Britomart will be completed, Ernst & Young’s adjoining Britomart building will also be completed and Telecom will move into its 4-building headquarters on Victoria St West.


“In the fourth quarter of 2008, net effective rents fell and, in 2009, with all these completions, the implication is that vacancy will increase further.


“But vacancies are still comparatively low because they troughed out at such a low point (6.1%) in 2007, the lowest vacancy level since 1988.”


Mr Moricz said it made sense for yields to fall along with any fall in interest rates. “But in previous downturns that didn’t happen. Yields were still increasing. During previous downturns the Reserve Bank significantly slashed interest rates, in similar moves to that currently being experienced.


“Between December 1990-92, 90-day bill rates fell from 13.8% to 6.4%, while between December 1996-98 they fell from 8.9% to 4.6%. Yields increased during both of these periods.


“Conversely, during periods of improving or strong market fundamentals, principally during the 2004-07 period but also in the mid-1990s, yields have decreased even with rising interest rates.


“So fundamentals override any changes in monetary policy, though interest rates do have an influence in yield in terms of the degree of easing. Even if interest rates drop to 3.5%, yields could rise further in 2009.”


As the cycle moves from the lowest vacancy rate in 20 years, Mr Moricz said cbd rents were falling and he expected that trend to continue through 2009.


While the greatest threat seemed to be in the cbd, Mr Moricz said industrial vacancy was already at 318,000m² so the addition of 175,000m² could make the industrial market the most affected in a continuing downturn.


Mr Moricz said each cycle had different characteristics, so there were limits to comparisons: “In the past you didn’t have an international monetary dimension that you have in the current cycle. That’s probably the biggest differentiator.


“But in each cycle you have an economic softening that impacted on demand, and you had an increase in supply when you had a decrease in demand. Currently that’s happening, mostly in the cbd office market. You had significant interest rate cuts in previous cycles, and again that’s happening.”


Related story: CBD vacancy up, but low compared to past averages


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Attribution: CBRE research, interview, story written by Bob Dey for the Bob Dey Property Report.

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CBD vacancy up, but low compared to past averages

Published 23 January 2009

Vacancy in the Auckland central business district office sector rose in both the first & second halves of 2008, but CBRE research & consulting director Zoltan Moricz said the level was still well below long-term averages.


CBRE research showed the overall vacancy rate for the cbd (including the Symonds St ridge & Viaduct Harbour precincts) had risen by 2.2% since its trough in December 2007, and was up 0.6% in the past 6 months, reaching 8.3% over all grades.


The latest lift took vacant space to just under 102,000m², up from 92,600² in June. The average vacancy over the past 5 years was 8.5%, equating to just under 101,000², and the average over 10 years was 10.6%, or 121,500².


Mr Moricz said vacancy deteriorated in almost every qualitative & geographic submarket in the past 6 months. The notable exception was C grade office space in both the core & fringe cbd.


Vacancy in the top grades (premium & A) rose from 1.1% to 3.3%, still low compared to the long-term average of 7.8%.


The vacancy in the premium grade, 0.7%, amounts to just 1000² – a smattering of spaces in the PWC & ANZ buildings.


Related story: Past downturns produce heartening comparisons


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Attribution: CBRE research, interview, story written by Bob Dey for the Bob Dey Property Report.

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