Auckland market outlook for 2020

A lack of development land, unprecedented low vacancy and the ongoing high demand for warehousing will push rents higher and yields lower. 

Offshore interest in Auckland property will continue, particularly in CBD office and mixed-use developments. New CBD developments coming to the market over 2020 will provide a welcome increase in available stock. The completion of Commercial Bay will result in occupier churn and a flight to quality as tenants in B Grade buildings move to spaces in A Grade buildings vacated by Commercial Bay tenants. We expect enough vacancy to be created to enable the market to function properly again and pressure on rents may come off a little. However we’re not expecting a large rent reset as many feared a few years ago.

Retail property will continue to be mixed, with bigger centres thriving and smaller/suburban centres steady or declining. However, increased confidence in retail property is expected to follow the boost in the housing market’s performance. Bank capital allocations are resulting in reduced availability of money for residential development, so completed residential stock will receive a great deal of demand pressure and price increases. This will kick off a flurry of activity in the residential market, following a subdued period over the past couple of years.