While we should remain optimistic about where our CBD is heading, there are certainly some challenges ahead. In saying that, its always important to provide context, and comparing our figures and challenges to the likes of Auckland and Wellington.
There is still strong leasing enquiry, while converting this interest into action has become more challenging. Regular calls from both tenants and consultants in the likes of Auckland and Wellington, there appears to be an expectation that Hamilton will have endless tenancy options, rental rates on the decline and landlords willing to take almost any offer put forward. The reality is quite different – why is this?
The Hamilton CBD is:
- not overly reliant on government tenants, as is the case in Wellington
- not overly reliant on corporate tenants, as is the case in Auckland
- not overly reliant on tourism, as is the case with the likes of Rotorua and Queenstown
Our latest Occupancy Surveys conducted between CBRE Research and NAI Harcourts to the end of June 2022, which has been carried out for over 15 years now, shows
continued trends.
CBD Office Occupancy
Surveying almost 800 tenancies and in excess of 350,000sqm of office space, we have seen the overall vacancy rate increase from 7.0% six months prior, to 8.5% in June. Interestingly A-Grade remains stable at 3.1%, while B-Grade increased slightly to 6.3%, as Grades C-E now average over 10% and Grade E in particular having increased from 7.8% to 13.9% over this six month period.
Putting this into context, CBRE Research reports:
- Auckland: Prime CBD Office is now 11.3% and Secondary CBD Office is 20.4%
- Wellington: Prime CBD Office now sits at a staggeringly low 1.5%, while Secondary CBD Office is 10%
The report concludes that although Hamilton CBD vacancy increased, this only impacted Secondary grade assets, underpinning the generally strong desire of occupiers to provide better quality workplaces for the employee communities.
CBD Retail Occupancy
Surveying close to 500 tenancies and in excess of 85,000sqm of retail space, this sector continues to defy every pundit prediction. Overall retail vacancy has decreased further, falling slightly from 5.6% in December, to 5.5% in June 2022. Prime retail increased slightly from 5.7% to 6.3%, while more cost effective secondary grade decreased from 4.5% to 2.1% and Tertiary grade increased from 6.7% to 7.6%, reflecting the desire for retailers to secure well located, but cost effective solutions for their businesses.
Putting this into context, according to the Colliers New Zealand Research Report September 2022:
Auckland: Strip retail vacancy within Auckland’s CBD stood at 13.8% in June 2022
Wellington: The CBD’s retail sector has proved more resilient than that of Auckland’s over the past two years. Vacancy was recorded at 8.7% in June 2022 which compares with a pre pandemic figure of 4.1%.
Quarterly retail sales values released by Statistics NZ, shows the Waikato Region increased by over 4% in Q1 2022 and an additional 1.1% in Q2 2022 (seasonally adjusted), which was above Auckland, Wellington and Christchurch.
While consumer Confidence Index (Westpac McDermott Miller Survey) for the Waikato Region fell from 97.4 in Q1 to 85.2 at the end of Q2 2022, this is still significantly higher than Auckland 73.6 and Canterbury at 77.8, and only just behind Wellington at 88.1.
For a full copy of either the Hamilton CBD Office or Retails surveys conducted between CBRE Research and NAI Harcourts, or to register to receive future surveys automatically:
Email hamilton@naiharourts.co.nz
