Wellington is developing a two tier office leasing market with some properties showing rental growth and others in decline, according to Bayleys Research.
A clear rift has emerged between rents for prime and secondary properties in the Capital, a report on the city's office market by Bayleys said.
Properties in the CBD core, particularly prime or newly refurbished buildings had performed well compared to buildings buildings in Thorndon or CBD fringe locations, Bayleys Research senior analyst Ian Little said.
"The average gross rental rate for CBD offices is $550 per square metre," Little said.
"This is an increase of approximately four per cent over the last 12 months.
"Wellington's city fringe office sector has not fared so well though," he said.
"There has been a defined downward trend in rental rates."
That underpinned the importance of location, with tenants not willing to pay the same rent for space in buildings outside of the CBD core, he said.
Rents in secondary quality buildings had also been under downward pressure, particularly in areas such as Te Aro and Thorndon.
In contrast, secondary space in the CBD core had risen from an average $265 per square metre in 2011 to $340 per square metre now.
Gross rental for prime office space in Thorndon, which is dominated by government tenants, have remained flat since 2010.
2 Comments
No one wants to work over by the basin reserve, there are too many geographical restrictions in getting over that side of welly. A 10 min walk to willis street is about as much as most can stand who have to put up with a stop start inconsistant train ride into welly in the first place. Once you're there though, great compact city-waterfront in the cbd, great atmosphere, much better than auckland
Given the 1.5m uplift all along the Golden Mile in the 1855 quake, and the number of heritage buildings sitting on that ex-seabed (e.g. the old BNZ at Willis/Customhouse Quay corner, is built squarely across the cut-down hulk of Plimmer's 'Inconstant'), I would imagine that the differential as between new strong builds and the old bricks-gravity matrices would be at least as strong a local force in the commercial rental markets there.....
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