Wellington Figures Q3 2023

Key Points: 

• In Q3 2023, yields continued their softening trend across all market sectors, increasing 52-96 basis points in the past 12 months. The impact of rising interest rates continues to hamper transactional activity.
• Rents remained stable in Q3. However, outgoings witnessed an increase across almost all markets in Q3 due to insurance and property rate hikes. This resulted in an increase in gross rents on a net lease and a decrease in net rents on a gross lease.
• In H1 2023, CBD office vacancy rose to 7.9% from 7.5%.  Premium grade remains very tight with only around 1,500 sqm of vacant space. Backfill vacancy had a material impact on Grade B vacancy, which jumped almost to 6.0% from 5.0%.
• Compared to previous periods, during H1 2023 no buildings were taken out of the market due to refurbishment and/or strengthening works, something that has characterised the Wellington office market since 2016.
• Industrial vacancy is 2.4% overall, with material variation between precincts and grades. Prime vacancy is zero. Rental growth continued in Q2 2023 for Secondary assets. Prime rents remained unchanged in Q2, after experiencing healthy growth in previous periods.