Wellington CBD office space remains in limited supply after the significant reduction in available space following the Kaikoura earthquake. The overall vacancy rate is at 6.2%, while the 20- year average is 9.6%. Total supply is at 1.39 million sqm, the lowest since 2011 and well down from the record of 1.61 million sqm in 2012.
While new supply is on its way, it is premium space which commands a premium rental. Prime and secondary rents for existing space are projected to increase further over the next few years.
Prime average yields have firmed only modestly compared to a year ago. Rising rents and a continuation of firming yields in 2019 will see total returns rise.
Total supply will increase with the addition of 99,000 sqm of premises either under construction or being refurbished over the next five years. This will assist in alleviating some of the acute supply shortages
The Bowen State Building at Bowen Campus is projected to be complete in Q3 2019. The Charles Fergusson Tower has since been completed. Both buildings are 100% leased to Ministry of Defence and Ministry for Primary Industries.