Wellington offices and shops sitting empty

HANK SCHOUTEN
Last updated 13:50 10/08/2012
Wellington offices
Thousands of square metres of office and shop space are sitting empty in the capital.

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Wellington now has more than 240,000 square metres of vacant office space - enough to house over 12,000 workers.

And the outlook is for office properties in the city is grim with concerns about the seismic rating of buildings and a continuing squeeze on government departments, says Colliers International research director Alan McMahon.

The Wellington office vacancy rate climbed from 10 to 14.9 per cent in the year to June.

Buildings are rated alphabetically according to seismic resilience. B and C grade office vacancies increased sharply to 11.8 and 20.5 per cent, but  even the A grade office vacancy rate rose from 2.7 to 4.6 per cent.

While the Te Aro flat area was the worst affected it was even having an impact in Thorndon, where a lot of the public service is housed.

''Thorndon, for many years, the Lambton Quay of the office market, reliable recorded low vacancy, is losing that reputation as vacancy rose again from 8.8 per cent in December 2011 to 14.1 per cent in June.

''In the office sector, continuing seismic concerns, coupled with expectations of no growth in public sector employment, continues to put pressure on the office market.

''The issue is uncertainty. The process of obtaining a reliable, detailed engineering evaluation and then costings to remedy any shortcomings, while maintaining insurance throughout, is time consuming and expensive in itself.

''While the issues won't be as severe in other centres, one positive for Wellington is that it is further through the process than anywhere else.''

Wellington has also got a lot of empty shop space.

Vacancy rates on Wellington's Lambton Quay retail strip have risen to 5.2 per cent, the highest it has been in three years.

Willis St's fortunes have improved with vacancies falling significantly from 10.7 to 7.3 per cent.

''Fringe areas of CBD retail precincts typically struggle when the economy is weak or stagnant and consumers are reluctant to open their wallets, and this is reflected in weak data elsewhere in the the CBD.

''Manners St for example, which was already high at 20 per cent in December 2011 has crept up further, recording 21.6 per cent in June.

Courtenay Pl vacancy has also increased but it is much healthier than Manners St at 9.3 per cent.

''It is difficult to see how over 12,000 square metres of empty shops can be filled quickly in a flat retail environment but we forecast continuing strength and low vacancy in Lambton Quay and nearby retail strips.'' said McMahon.

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