Wellington Figures Q1 2025

Key points:

• The RBNZ’s ongoing monetary easing policy increased investors’ appetite for deals in Q1 due to lower interest rates. However, the sudden volatility in global financial markets could hold back some decisions for acquiring assets on the riskier side of the spectrum. Wellington indicative yields remained stable during Q1 across all sectors. 
• In Q1, Wellington's CBD office market saw a decline in Prime net effective rents due to increased incentives, while the Secondary CBD office submarket experienced a drop in face rents. Also, the Secondary CBD retail submarket registered a decline in rents due to higher vacancy in some pockets. In contrast, industrial rents rose with lease renewals resulting in higher rents, with tenants willing to pay a premium to retain space.  
• CBD office vacancy increased to 14.3%. The primary factor was the increase in vacant office space in Secondary buildings. While many owners of office buildings are lamenting higher vacancy, the market remains relatively healthy. When looking at Prime grade office space, Wellington has the second-lowest vacancy rate (6.0%) among all major cities in Australasia, behind only Christchurch. 
• The retail market saw a rise in vacant space last year due to weaker trading conditions and reduced foot traffic. In the CBD retail market, the vacancy rate climbed to 8.5%, largely driven by a substantial increase in vacant locations in the Courtenay area.