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Office flight to quality continues

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he flight to quality across all commercial sectors defined deal activity for Bayleys’ leasing teams around the country in 2022.

Across the board, office occupiers are seeking higher levels of amenity, modern buildings with strong design and sustainability credentials and prime locations to help draw staff back to the office – and as a recruitment/retention mechanism.

Lloyd Budd, Bayleys’ Executive Director Auckland Commercial and Industrial said it’s not a level market playing field, though.

“There’s a widening gap between prime and secondary stock with a real shortage and competition for high-spec space, while weaker demand for B-and C-grade office property is meaning landlords are often needing to provide incentives to secure occupiers,” he said.

“Continued disruption across global supply chains is still impacting the availability and cost of construction materials which does in turn affect timelines and budgets for office fit-outs, so we are noting a real swing towards fully-fitted out office suites that are turn-key ready for occupiers.”

“In Wellington, seismic issues still plague the office sector as confusion reigns over building assessment regulations – for both tenants and landlords – and this is putting a real squeeze on existing compliant office space.”

Last year, Bayleys’ office leasing teams concluded a broad range of deals from premium corporate campus-style office space right through to more modest premises, with some standout transactions in the main centres.

The biggest 2022 office lease for Bayleys Wellington was for the Ministry of Education (MoE) for space in Gilmer Street in the CBD, with the deal brokered by Luke Frecklington and Luke Kershaw.

Having exited its offices at 33 Bowen Street due to seismic issues, MoE committed to 7,651sqm in the Gilmer Street building which previously housed Stats New Zealand, so was already fitted-out to ministry requirements making for a seamless transition.

In Auckland, the flight to quality and drift to the waterfront was demonstrated by Sky’s move to solution-focused space at the gateway to the Wynyard Quarter and Viaduct Harbour.

Budd said as Sky embraces more collaborative and flexible ways of working, the creation of innovative space in this prime location will allow its team to thrive.

Meanwhile, Arup International – a multi-national professional services firm focused on the built environment – has leased 1,052 sqm of space at 14-18 Customs Street East in Auckland’s Britomart precinct.

“This space is in the redeveloped Hayman Kronfeld Building within the game changing Britomart area which has undergone significant transformation and will fully leverage off the refurbished transport hub and the emergence of the City Rail Link nodes.

“There’s strong demand and low availability for ‘special’ office spaces like these refurbished character offices in a high amenity precinct.

“Tenants are willing to pre-commit to secure great spaces and Arup demonstrated this in moving from mid-Queen Street to be closer to the waterfront and the major city transport hub which strengthens its position in the market from a staff retention and recruitment perspective."

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