TelferYoung (Wellington) Limited
Wellington Newsletter - November 2005
1 November 2005
The Directors and staff at TelferYoung (Wellington) Ltd wish you a happy holiday season and very prosperous New Year.
We thank you for your support in the past year and look forward to continuing our association. The office will be closing for the Christmas break on December 23 and re-opening on the January 4, 2006.
Office Vacancy Report
Total office space in Wellington's CBD at June 2005 saw a small increase to 1,364,516m2, resulting from the occupation of the Department of Environment building in Thorndon's Kate Sheppard Place.
The overall vacancy rate for the Wellington CBD has reduced over the last 6 months by 0.63%, and now stands at 9.02%.
The Core vacancy rate has increased with significant vacancies in Pastoral House, the old AMP Head Office and the Sovereign Centre due to their refurbishment. New leases have been negotiated in many buildings but because they are unoccupied, they are treated as vacant for the purposes of our survey
The Fringe rate has decreased marginally, although significant vacancies exist in the Chews Lane/Victoria Street complex of buildings, recently sold by the Wellington City Council. Some areas are to be refurbished for offices; some areas for alternative uses.
Thorndon vacancies have fallen to the lowest level since the survey was started, and now stands at 2.38%. Within the recognised Government Sector no space is available in that precinct. The only accommodation is located on Thorndon Quay. Conversion of some older buildings to apartments, a feature of this area, continues.
Te Aro also shows significantly reduced vacancies, primarily the result of the removal from the office inventory of buildings to alternative uses - principally the former education buildings on Abel Smith Street converted to the Wellington Arts Centre.
| Jun 04 | Dec 04 | Jun 05 | |||
| CBD Total: | 9.38% |  |
9.66% |  |
9.02% |
| Core: | 7.31% | |
9.33% | |
10.30% |
| Fringe: | 10.52% | |
12.61% | |
12.29% |
| Te Aro: | 16.34% | |
11.48% | |
7.47% |
| Thorndon: | 7.89% | |
5.38% | |
2.38% |
The vacancy rate generally increases with declining building quality:
| Overall: | Dec 04 | Jun 04 | |
| 9.66% | |
9.02% | |
| Premium Sub-market | 5.87% | |
0.71% |
| Good Sub-market | 6.86% | |
7.15% |
| Average Sub-market | 9.35% | |
9.69% |
| Fair Sub-market | 11.49% | |
8.71% |
| Poor Sub-market | 37.08% | |
39.12% |
Upgrading existing space to meet increased tenant expectations will continue and is likely to be of increasing importance in ensuring minimal vacancies. Most significant tenant relocations involve substantial refurbishment of buildings.
A number of Government Departments have renegotiated or are negotiating new buildings to meet their particular accommodation needs (Environment, Statistics, Defence) and while suitable sites are limited, this trend could continue.
The old Pastoral House on Lambton Quay is being refurbished by its new owner with Government tenants in mind. It has been leased predominantly to MAF. The extension to the Treasury Building will be largely occupied by the Department of Health. Other Government agencies such as the Ministry of Transport and Conservation have, or are in the process of upgrading the standard of their accommodation. The Sovereign Centre has been undergoing major refurbishment, again with Government tenants in mind, although so far only private companies have taken space on the higher smaller floors. Significant areas of the building remain available for lease.
Continued Government expansion is likely to impact on the CBD vacancy rate over the next 12 months, especially for the better quality buildings.
The number of significant tenant relocations which have been announced will have a significant impact on the market, creating opportunities for other tenants. They will require owners of older buildings to ensure their accommodation is in optimum condition to ensure ongoing occupancy.
The trend of private companies (in particular) to consolidate their occupation over smaller areas, a feature of recent years, continues. With profit pressures facing many organisations, the more intensive use of rented areas will continue to be a significant issue. Where relocation at the end of lease terms occurs, many are reducing their occupied areas.
If you require further information or wish to obtain a copy of the Vacancy Report please contact Martin Veale or Phil Tomlinson of our office.
Residential Market
The Wellington residential market continues to record value growth in most sectors albeit on lower sales volumes than evident in the preceding decade. There were limited signs of seasonal easing through the winter months, which has been a noticeable trend over previous years.
Demand within the first home buyer sector remains strong with dramatic increases in value recorded in Wellington's outer suburbs. This also applies to Porirua and Hutt City; areas which are also perceived to be 'better value for money'.
The market for properties with harbour or sea views remains particularly buoyant as evidenced by the growth in values in Porirua's seaside suburbs, including Papakowhai, Plimmerton and Titahi Bay.
The number of multi-million dollar property sales has increased markedly over the last two years. The most significant transactions were, in the main, reported from locations with immediate views to the city and/or harbour.
Recent sales of note include:
- 34 The Crescent, Roseneath sold May 2005 for $2,125,000. It comprised a dated, purpose-built concrete home and income residence measuring some 440m2 inclusive of integral double garaging. It occupies a steeply falling 556m2 section with an inner harbour aspect.
- 34 Orchard Street, Wadestown sold April 2005 for $2,208,000. This is a superior specification, double storey concrete and tile clad residence constructed in the 1930's over approximately 420m2 (inclusive of garaging) and occupying a large easy contoured rear site, with attractive inner harbour views.
- 30 Forres Street, Seatoun sold February 2005 for $3,350,000. An attractive, Georgian style, 1930's residence measuring some 240m2 complemented by detached double garage/ studio office building, standing upon a level 957m2 corner section in central Seatoun.
The latest average house sale price for the Roseneath/Oriental Bay area for the quarter ending June 2005 was $1,285,500 up from $651,000 two year's prior.
There has however been a slight slow down and easing of prices for investment type properties, although demand for more affordable realty in the traditionally lower socio-economic suburbs such as Porirua East and Wainuiomata remain strong. With further increases in the official cash rate predicted, we anticipate there will be a softening in demand over the next few months and a plateauing in values.
Back issues of the newsletter can be obtained from TelferYoung (Wellington) Ltd
Level 9,
85 The Terrace,
PO Box 2871,
Wellington.
Ph: 04 472 3683,
Fax: 04 478 1635
www.telferyoung.com
email: telferyoung@wellington.telferyoung.com
+ Adrian Brady + Chris Barnsley + Martin Veale + Jerome McKeefry + Lindsay McAlister + Graeme Kirkcaldie + Stephen Batt + Jason Lochead
Opinions expressed in this newsletter are of a general nature and should be used as a guide only. TelferYoung should be consulted before acting on this information.