Wellington Figures Q4 2023

Key Points:

• 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 Prime office submarket stock expanded by circa 63,000 sqm during H2 due to the reintroduction to the market of the Asteron Centre and two new buildings: 44 Bowen Street and One Whitmore, the latter being Wellington’s new waterfront building, mostly occupied by BNZ.
• 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.
• In Q4 2023, yields halted the softening trend they experienced in the previous quarters.  The market seems to be reaching the peak of the current yield cycle.
• Industrial rents remained unchanged during Q4, whilst the Grade A and B office submarkets and Prime and Secondary CBD retail premises experienced a drop in effective rents due to increasing incentives driven by higher competition between landlords to secure tenants.