Some dramatic changes are set to take place in the office space landscape in Auckland’s CBD in the next five years.

Some significant new buildings will be coming on stream and we will see 250,000 square metres (that’s well over two million square feet!) of new office space become available between 2009 and 2013.

Sure, with the credit crunch one or two projects may come a cropper but by and large, this forecast will be pretty close to the mark.

Construction is already under way for the Deloittes building at 80 Queen St, Westfields’s new office tower at the Downtown site at 21 Queen Street and Westpac’s new development at Britomart.

Add to that the IAG Centre in Fanshawe Street, the redevelopment of the old NZ Post site in Victoria Street, and a development underway at East Britomart, and you have more than 60,000 square metres of office space coming on stream in the Auckland CBD before Christmas next year!

The space in these developments is largely pre-leased, so there will be a vacuum created as businesses leave their old premises and move to their new office towers.

This is going to impact vacancy rates. Already we are seeing vacancy rate increases of 5-8 percent. Some smart tenants will see this increase in supply as an opportunity to relocate to a better quality of accommodation.

Coupled with these changes is the challenge for businesses that are being forced to downsize in the current market, and which are going to face some challenging negotiations with landlords as they need less space.

The vacancy shuffle is starting to get extremely complex. Sound advice and careful thinking is going to be required so business tenants don’t get shafted.

Yes, with a good supply of space there is going to be a great deal of discretion for tenants but that, coupled with a tight market, tenants shrinking their operations, and landlords playing hardball in negotiations, will all add up to a volatile market that will require very careful navigation.

This entry was posted on Tuesday 9th September 2008 and is filed under Property Leasing. Both comments and pings are currently closed.