Prime Auckland CBD office occupancy grows as new companies come into the CBD

Hybrid working having less of an impact than formerly thought

The Auckland CBD office is alive and well. Research published by leading global real estate firm CBRE New Zealand shows an overall net increase in prime Auckland CBD office space take up over the past year as new companies come in to take up office space alongside companies expanding their office footprint.

CBRE analysed the Prime quality (Premium and Grade A) take-up activity of occupiers in the Auckland CBD in 2022, monitoring 43 occupiers that took up at least 300sqm of Prime quality space over the course of last year – and, where applicable, also showing the backfill impact of the moves. The total amount of space taken up by these 43 occupiers is just under 40,000sqm, about 5% of the total Auckland CBD Prime quality stock.

While there is a wide range of individual scenarios - from businesses relocating and contracting within the same grade to occupiers upgrading and expanding - the research shows that the net impact of these moves is about an 8,000sqm absorption gain.

Grouping the scenarios into four main categories - new entities, expansions, relocations within the same grade and relocations to better grade - reveals that the healthy ‘net absorption’ (overall levels of rising occupancy) gain in 2022 was driven exclusively by new market entrants and businesses that retained their existing footprint and took up more space.

This outstrips the effect of occupiers who relocated within the same grade and to better grade space decreasing their occupancy footprint.

Zoltan Moricz, Executive Director Research at CBRE says that hybrid working and more flexible work arrangements are having less of an impact on space demand than many have thought or feared in the past few years. “High quality workplaces can help bring employees back to the office, attract new talent, improve company culture and community, and increase sustainability credentials. At the same time, as hybrid working models become the new norm, the general assumption is that businesses will need less space for the same number of employees and scope of activity, simply because a certain proportion of the workforce will always work remotely.

“Our analysis indicates that amongst relocating occupiers, the lost footprint has been about 12% of their old size at an aggregate level in 2022. And while there has been a fair amount of in situ contractions in the market last year, expanding businesses and new market entrants (signs of a well-functioning market) have largely compensated for them.”

Gergely Gaspardy, Associate Director Research at CBRE adds: “Looking at the moves and commitments from a sectoral perspective shows that the technology and public sectors have been the main contributors to the positive Prime quality net absorption last year, while the largest losses were recorded amongst media and telecom and professional services businesses.”