Wellington Figures Q1 2024

Key Points:

• As in Auckland, while our recent quarterly data indicates that we are close to the top of the current yield cycle, we expect selling pressure to intensify on some vendors in the coming months.  The resulting transactions will provide a clearer indication to where the remaining gap between vendor and purchaser price expectations will settle.
• Rental growth was mostly absent during Q1, except for prime industrial buildings. Incentives remained unchanged.  However, this might change for the office market which could be exposed to higher incentives due to increasing vacancy.
• During H2 2023, office vacancy shifted to the double-digit realm, increasing to 10.2% from 8.3%. This was mostly triggered by high levels of backfill vacancy (mainly in Grade A premises), since the market witnessed a notable volume of supply completions that unleashed a high number of tenant movements.
• The industrial market saw a slight increase in vacancy during H2, rising to 2.5% from 2.4%, triggered mainly by an increase in the lowest quality buildings. Grade A industrial assets remain fully occupied.