27 Feb 2017

Quake puts squeeze on Wellington office space

1:55 pm on 27 February 2017

There is less office space available in Wellington than there has been in almost a decade.

Wellington CBD

Only 7.8 percent of office space in the capital's central business district was vacant last month Photo: 123rf

Only 7.8 percent of office space in the capital's central business district was vacant last month, down from 10.5 percent shortly before last year's quake.

The shortage was due to damage following the November earthquake.

Colliers International's office leasing specialist Steve Maitland said displaced businesses were still looking for space and options were limited.

"Immediately after the quake, a number of large organisations suddenly lost a vast amount of office space. BNZ and Statistics New Zealand alone lost almost 28,000 square metres - enough for more than 2000 staff.

"It was absolute bedlam," he said.

"In over 20 years in the business, I've never experienced a period like that November through to Christmas. The phone never stopped ringing."

Statistics New Zealand and the BNZ both moved quickly to take up a lot of what was available after the November quake.

"A couple of large companies moved very quickly," Mr Maitland said.

"They secured space for well over 2000 people which takes the majority of large options away from our market... so there's a real lack of suitable options going forward," he said.

Mr Maitland pointed out demand came in two waves - immediately after the earthquake and when Wellington City Council last month ordered further seismic tests on 80 buildings.

Some organisations would need to start considering options outside the city, he said.

"The issue the market's now faced with is we don't have large floors or big blocks of space together sitting in the market available now.

"So they're having to make compromises on location and perhaps scattering the organisation over multiple buildings or even leaving the Wellington CBD and looking at alternative locations such as the Hutt Valley or even out in Porirua."

The challenge for Wellington was to keep businesses confident they were in the right place, he added.

"The last thing we want is for some of these large users is to start questioning whether they want to remain in Wellington.

"There is only a finite number of buildings here. We know the stock that's coming up over the next few years and there will be more vacancy coming up which is good," Mr Maitland said.

"But the issue is the here and the now and it's difficult to give a lot of these tenants the space they currently require."

It is the first time the rate of vacant offices has dropped below 10 per cent since December 2010 when it was at 9.9 percent.

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