Report | Intelligent Investment
COMING BACK INTO ALIGNMENT - Office demand and employment growth after a decade of disconnection
A structural analysis of office demand and employment growth after a decade of disconnection
March 19, 2026 11 Minute Read
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- Analysing recent and historic employment and office absorption trends suggests that the structural shifts that drove white collar employment to disconnect from office occupancy since 2011 are finally drawing to a close.
- Between 1999 and 2010, employment growth and office net absorption (the change of occupied space) had a close relationship. For every 1 percent increase in office-using employment, occupied office space increased by 0.93 percent in the Auckland CBD office market (1).
- This relationship began to weaken in 2011 and fell apart between 2014 and 2019. During this period, only 0.24% of employment increases resulted in additional net absorption. The relationship deteriorated further after 2020 when organisations started implementing hybrid working.
- Space worker ratios, or leased square metre per office using employee, an indicator of shifting office space patterns, also dropped significantly, from 16.6 in 2010 to 12.8 in 2019. Improved office efficiency (from both layout and new buildings), the rise of Activity-Based Working (ABW)
- Since 2020, hybrid working has had a further negative impact on space worker ratios; however, leased sqm per office using employee in the last five years did not drop as severely as post-GFC, with a slightly lower annual rate of decline.
- CBRE New Zealand Office Occupier Survey 2025 shows that the hybrid working trend has stabilised, but with senior leadership and HR now playing the central role in setting attendance expectations. These expectations indicate office attendance and utilisation are likely to lift in coming years.
- While our occupier sentiment surveys suggest office occupancy will be improving in the future, actual occupancy data already shows a positive turn in market trends. In 2025, of the 25 largest CBD office space take ups, 21 resulted in a net occupancy gain, with 10 involving a pure expansion that did not involve relocation. This has contributed to H2 2025 net absorption exceeding 18,000 sqm, marking the strongest half-yearly performance in the last decade since H2 2015.
- These trends suggest that the structural shifts causing white collar employment to disengage from office occupancy between 2011 and 2022 have concluded, resulting in a renewed connection between employment and occupancy/net absorption.
- Economic forecasters are uniform in their view that the labour market has bottomed out, and over the next few years employment will be experiencing a cyclical rebound averaging circa 2% pa, in line with the projected improvement in GDP growth 2.
- Our analysis points to office space demand and net absorption rebounding above what has been seen over the past 15 years as absorption responds to employment growth driven by a rebounding economy. Base scenario projections indicate absorption of c25,000 sqm pa to 2029 compared to 14,000 sqm pa between 2011-2019 and 29,000 sqm pa between 2000-2007.
- While our analysis indicates that positive employment growth in the future will result in a higher rate of office space demand and absorption than seen over the past 15 years, office based employment growth in itself has become a significant topic with the advent of generative and agentic AI, its increasing capabilities, and increasingly widespread adoption. The eventual impact of artificial intelligence on the white-collar labour market is subject to considerable debate. CBRE New Zealand Research is preparing a separate, forthcoming report analysing AI’s impact on the New Zealand employment market, particularly within the office using industries through a deeper dive to reconcile contrasting trends and opinions.