‘Pent-up demand’ for Auckland sites
Auckland’s ascendancy as a global place of business has been confirmed by a survey of office tenants and the sale of a high-profile hardware store.
An ‘‘occupier sentiment index’’ (OSI) survey by the Royal Institute of Chartered Surveyors measured Auckland’s market momentum, taking into account factors like supply, demand and expectations.
Auckland’s rating was strong, as was Sydney’s, the only other Asia-Pacific city in the research.
JLL commercial property consultant Steffi McKeown said it was no surprise that Auckland scored highly on the OSI reading.
‘‘Due to the attractiveness of the city and the volume of people moving here, businesses are growing and this is seeing a lot of movement as they search for more or bigger space to lease.’’
Other surveys back this up. In February, a business confidence survey by the Auckland Chamber of Commerce found 60 per cent of Auckland businesses thought their business situation would improve over the next six months, up from 53 per cent last November.
An increasing trend among CBD businesses was to try to find ways around the city’s transport problems, such as shared space or satellite offices.
Forty-three per cent of businesses in the chamber of commerce survey felt location was critical to attracting good staff.
‘‘There is a recognition with businesses that location is influencing who they employ,’’ McKeown said.
The marked growth of whitecollar employment is also putting pressure on office space.
According to research by the New Zealand Institute of Economic Research (NZIER), the number of white-collar workers has risen 34 per cent since the end of the global financial crisis in December 2009.
Managers and professionals have risen in number by 51 per
"There is a recognition with businesses that location is influencing who they employ." Steffi McKeown, JLL consultant
cent to 170,200 since the global financial crisis ended in late 2009, and professionals have grown nearly a third to 229,800.
Administrative workers, on the other hand, have actually dropped more than 8 per cent to 110,400.
After reaching a high point in mid-2015, there were suggestions that professional and management individuals had become substantially less reliant on admin support since the GFC.
‘‘If we compare the total office stock JLL was tracking in 2009 compared to today, physical floor space has only increased from 1.97 million square metres to 2.11 million sqm [up 7.1 per cent],’’ the consultancy’s national research manager, Tom Barclay, said.
Conversions of older office space to apartment or student accommodation have also tightened up the supply of office space.
Meanwhile, Bunnings Warehouse’s Grey Lynn store has sold locally for $37.7 million, a record low yield for the hardware chain, which has a policy of selling stores with long leasebacks.
The building, which opened in May, holds a prominent spot on Great North Rd spanning 8872sqm.
It carried a 12-year lease to Bunnings and sold for a yield of 4.98 per cent, which showed the buyer was willing to pay top dollar.
Bruce Whillans, managing director of Whillans Realty Group, said he had been ‘‘inundated with an unprecedented volume of inquiries for this size of asset’’.
‘‘It shows that there is significant pent-up investor demand which remains unsatisfied.’’