Auckland’s commercial real estate market is fetching increasing rents.
Property manager firm JLL said rents on Auckland’s commercial property sectors were trending up, with a new benchmark of $5500 per square metre for top prime luxury retail.
Industrial, office and retail sectors across New Zealand’s three main centres were showing rental growth, it said.
JLL NZ head of research Gavin Read said there were trends emerging in Christchurch and Auckland’s retail market.
“For luxury retailers, size becomes a key consideration, with units in excess of 200 square metres (sqm) proving popular,” Read said.
Although there were no retail-only developments underway in Auckland’s central business district (CBD), he said many of the new hotel and office buildings, such as Precinct’s 1 Queen Street, were expected to have a retail component.
The City Rail Link was beginning influence market activity in uptown Auckland.
“Karanga-a-hape and Te Waihorotiu stations will be critical points for pedestrian flow to support retail further uptown,” he said.
“Landlords are already starting to structure short-term leases to take advantage of the City Rail Link when it opens – and astute tenants seeking favourable rates in a high growth area are currently seeking suitable space.”
Suburban and regional shopping centres were also seeing increases in average rents, he said.
Industrial property had also seen continued rent increases throughout the second quarter of the year, with average year-on-year growth for prime industrial across all precincts rising to nearly 17 percent.
“Even with a slight increase in vacancy, tenants are still competing for space, with demand particularly robust for well-located, modern facilities,” Read said.
Office rents were also strengthening with a 1.6 percent increase to $566 per sqm, and forecast to rise by 12 percent over the next five years to hit $635 by the end of 2027.
In Wellington, gross rents for both prime and secondary office space remained static, with vacancy rates in the CBD rising to 6.1 percent from 3.8 percent growth.
“The demand for seismically strengthened office spaces in the CBD is expected to underpin demand and we forecast prime rents will increase $5 per sqm, and secondary rents by $7 per sqm, by the end of the year,” Read said.