Wellington Figures Q2 2024

Key Points:

• The fundamental underlying stability, WALT, and covenant strength that the large public sector brings to the Wellington property market remains overshadowed by cyclical concerns around government cutbacks and soft economic conditions. Despite this, investor sentiment is becoming more positive as interest rates peak, although pricing remains relatively soft.
• During H1 2024, office vacancy increased from 10.2% to 13.4%, mainly due to vacancies in Secondary buildings. The rise in Grade B and Grade C office vacancy resulted from a combination of tenants downsizing their office space and backfill vacancies.
• In Q2 2024, effective rents decreased in both the Prime and Secondary CBD office submarkets as landlords offered higher incentives to mitigate the vacancy gap.
• Supply-demand conditions are more favourable in the CBD retail and the industrial sector, and these are characterised by stable to increasing face rents.  Market rent growth this year has been most evident in the lower to mid-range of the Prime industrial submarket as this catches up to benchmarks set earlier at the upper end of the range.