Auckland: empty offices on rise

Double-digit vacancy rates are being forecast for Auckland offices...

Alan McMahon, Research and Consulting Director of Colliers International, has today issued a report saying vacancies were already up on last year but he expects the amount of empty floorspace to rise.

"Wellington and Auckland CBD's are holding up quite well to date but we forecast double digit vacancy in both centres as the crop of new buildings under construction are filled," he said.

Auckland city fringe vacancies have risen from 5.7 per cent last year to 6.3 per cent.

"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 per cent, the highest since our surveys began in 1995," McMahon said.

Rising Wellington and Auckland office vacancies were good news for tenants but bad for landlords because they pointed to a period of static or falling rental levels and capital values, particularly for lower grade, poorly located properties.

The report included a paper from Jeremy Simpson, Forsyth Barr's Senior Investment analyst, which picked a patchy outlook for listed property trust and companies.

"There remains considerable uncertainties around how bad direct property values, vacancy and rental levels will get over the next 12 to 24 months. Listed property vehicles continue to divest assets and Kiwi Income Property Trust has been the first one to raise new equity.

"In this environment it is difficult for the listed property sector to rally, even with its very attractive yields relative to interest rates and an unprecedented level of risk premium already factored in."

Source: www.nzherald.co.nz