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Auckland set for more more new office buildings and apartment conversions in CBD

Auckland set for more more new office buildings and apartment conversions in CBD
<a href="">Image sourced from</a>

The amount of office space in new buildings being consented in central Auckland could more than double over the next 12 months.

That could see Auckland start to overtake Christchurch as the major centre of office building activity in the country over the next few years.

The latest figures from Statistics NZ show that just over 95,000 square meteres of new office buildings were consented in the Auckland region in the 12 months to August, of which just over 52,000 square metres was in Central Auckland which includes the CBD.

That compares with just over 177,000 square metres of new office buildings consented in Canterbury during the same period, almost all of which was in Christchurch.

That was more than double the previous high of 85,598 square metres of new office buildings consented in tCanterbury in the year to August 2009.

Those figures are for office space in new builidings and exclude office space being developed as part of the refurbishment of existing buildings.

As the table below shows, the amount of new office buildings consented in Canterbury has grown steadily as as the post earthquake reconstruction of Christchurch has proceeded, with nealy 385,000 square metres consented over the last three years.

In Auckland, new office developments have been more patchy, with 250,630 square metres of new office buidlings consented in the region over the last three years, which was less than half the 512,479 square metres consented during during the last peak of 2007 to 2009.

However Auckland may be about to play catch up.

Rob Bird (pictured below), the director of office leasing for Colliers International said there was likely to be a surge of consents for new office buidlings in Auckland's CBD over the next year or so, which could push the amount of new builds consented in the city back up over 100,000 square metres a year.

Most of this was centered around the new office precinct between Viaduct Harbour and Westhaven but there would also be some new projects on the downtown area such as Precinct Property's plan to redevelop the Downtown shopping centre site at the bottom of Queen St.

However that did not necessarily mean that the total amount of office space in the city centre would increase by the same amount of new space that was built.

As tenants relocated into new buildings located closer to the waterfront, many of the older buildings they left behind were likely to converted to apartments, Bird said.

A combination of a fall in the relative value of older buildings and rising residential property values meant conversion of many more office buidlings to apartments had become financially feasible, he said.

In the Wellington region there has been a big jump in new office consents, with 33,749 square metres of new office buidings consented in the year to August, compared with 8321 in the previous 12 months.

However that was still well down on the record 94,517 square metres of new office buidlings consented in Wellington in 2007.

Ryan Johnson, the managing directoir of CBRE Wellington said most of the new office space being built in the city was smaller scale buildings and he did nor foresee any major new office towers being built in the near future.

The government sector accounted for about 40% of office space in the city with large corporates accounting for around 20% and the rest was mostly small to medium sized businesses, he said.

For a new office tower to be built, the tenants would need to be prepared to pay gross rents of about $650 per square metre, Johnson said.

Government tenants weren't prepared to pay that and smaller companies's needs could be met by smaller buidlings, which meant there was insufficient tenant demand at the moment to justify a new high rise office tower in the capital.                              

The Office Supply Pipeline
Square metres of new-build office space consented in the 12 months to August
Excludes refurbishments and alterations to existing buildings
  2012 2013 2014
Northland 619 1980 4950
Rodney 1128 0 2623
North Shore 1250 2990 6316
Waitakere 6955 3170 25,190
Central Auckland (isthmus) 70,531 37,654 52,136
Manukau 11,623 11,249 8375
Papakura 3861 4088 17
Franklin 1014 95 365
Total Auckland Region 96,362 59,246 95,022
Waikato 24,179 14,103 7216
Bay of Plenty 20,171 8831 11,854
Gisborne 784 539 0
Hawkes Bay 5256 10,709 2194
Taranaki 6086 341 1236
Wanganui 952 200 200
Palmerston North 192 1086 440
Kapiti 430 653 745
Porirua 1082 171 0
Upper Hutt 431 0 840
Lower Hutt 494 824 1177
Wellington City 2505 4518 29,254
Total Wellington Region 5091 8321 33,789
Nelson 1998 1554 811
Marlborough 465 1026 1233
Tasman 1401 1151 1645
West Coast 207 816 661
Canterbury 71,683 136,020 177,117
Otago 5226 2029 8769
Southland 2193 1055 7581
Total NZ 243,684 255,111 356,030

Source: Statistics NZ


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remove the banks from the above figures