Capital suffering office space shortage
There’s an acute shortage of office space in Wellington due to November’s earthquake, according to a new Colliers International survey.
Monday, February 27th 2017, 12:00AM
by Miriam Bell
Colliers International’s research and consultancy team recently conducted the first post-quake survey of the Capital’s office space and it revealed that it is at the lowest level in nearly a decade.
Just 7.8% of office space in Wellington’s CBD was vacant in January.
This is down from 10.5% shortly before the 7.8 Kaikoura earthquake in November and from 11.9% in June 2016.
Colliers International CBD office leasing specialist Steve Maitland said it is the first time the vacancy rate has dipped below 10% since December 2010 when the vacancy rate was 9.9%.
Much of the shortage is due to seismic damage following the earthquake, which resulted in about 7% of the office stock being removed from the total pool of vacant office space.
Maitland said some displaced businesses are still desperately looking for space, but options are very limited.
“Wellington is full: You could put up a sign saying, ‘the inn is closed’ – that’s how constrained the supply is.”
The demand has come in two waves, with one wave immediately after the quake.
But Maitland said that there is now a second wave of demand, which has developed since Wellington City Council ordered more seismic tests on 80 buildings last month.
“The market has gone into overdrive again as tenants consider whether to move premises and start weighing up the alternatives.
“They’re all finding out very quickly that there aren’t many options out there. There’s a real lack of large floors and contiguous spaces.”
The shortage is particularly acute for larger organisations of more than 70 people, which require 1000sq m or more of floor space.
Demand for the remaining space will ease as new buildings became available within the next year, Maitland said.
“When those new projects are complete, office space will become available in the tenants’ old buildings. But the real issue is the here and now – it’s like a game of musical chairs.”
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