More vacant office space expected for Wellington

Thursday, 7 November 2024

Vacant office space in Wellington is expected to increase in the next year.

Vacant office space is predicted to increase in Wellington over the next year.

Nearly 6% of office space is empty across the city in part because 127,000 sqm of office space is under development, undergoing seismic strengthening or refurbishment.

JLL New Zealand’s Vertical Vacancy Review for the third quarter shows Wellington’s premium vacancy rate stands at 10.3%, with A-grade vacancy at 4.1%.

Overall, vacancy in the city has increased to 5.9%, reflecting nearly 4,000sqm of additional space, with more space likely to become available throughout next year.

The report shows that 13 out of 20 A-grade buildings were fully leased.

Head of Research, New Zealand and Head of Strategic Consultancy, Auckland at JLL Chris Dibble says overall vacancy for the city is at 5.9%, an increase since the first quarter of 2024

Overall vacancy for the city is at 5.9%, an increase since the first quarter.

Head of Research, New Zealand and Head of Strategic Consultancy, Auckland at JLL, Chris Dibble said the findings showed that development and refurbishment activity across New Zealand’s three key cities remained high with owners appreciating that attracting the best occupiers in a higher vacancy market means providing the best possible premises.

Dibble said Wellington occupiers were voting with their feet, looking for office space that could provide sustainability options along with hybrid working conditions.

He said employers looking to retain and attract staff were considering their working environment.

Dibble said he would expect confidence to increase into next year.

“It’s been a bit tough over the last year and a bit of ‘survive until 25’,” he said.

In Wellington three big law firms have either recommitted to their leases or relocated with Russell McVeagh recommitted to 2,149sqm at 157 Lambton Quay.

MinterEllisonRuddWatts moved out of 125 The Terrace to occupy one floor at 1 Whitmore Street (BNZ Place) and Simpson Grierson’s relocation from Lambton Quay to Bowen St has left a vacancy at HSBC Tower.

The Wellington City Council is moving into the Datacom building on Jervois Quay at the start of next year leaving the 9000sqm it is occupying on The Terrace.

AA Centre is also moving from the Grand Arcade to new premises on Featherston St while the Chartered Accountants Australia and New Zealand have signed a lease at BNZ Place, 1 Whitmore Street.

Dibble said the recent Official Cash Rate reductions were bolstering the market as tenants and investors seek high-quality, sustainable options.