New figures show promising future potential for business growth in Auckland and surrounding cities.
More companies are interested in renting space in the region, with tenant demand increasing by nearly 30%, the highest in five years, according to a new report from real estate firm CBRE.
“Vacancy rates remain high, but the leasing activity is essentially about getting more businesses back into the market,” said Howard Huang, a market analyst at Avison Young.
Before the pandemic, the overall vacancy rate was nearly 8%. There are currently more than 21 office vacancies in the Auckland region, nearly three times that amount. But Huang said there are signs that a tipping point has been reached.
“We think the recovery will take a little longer than expected, but the recovery is progressing and we have passed the tipping point,” he said.
The biggest growth driver is new large building leases in Emeryville and Alameda. Meanwhile, both new and renewed leases are being signed on space in Oakland.
Experts believe that landlord incentives, as more employees return to in-person work and more opportunities to expand at lower costs, are contributing to the market expansion.
“Many classroom and office landlords are willing to not only lower their asking rates, but also offer free months of rent and tenant allowance concessions,” Huang said.
Estavillo Law Group has been based in Oakland since 2011 and is currently expanding to new locations. CEO Jason Estavillo said the market has allowed him to move into a better building with more amenities without spending a fortune.
“It's a buyer's market right now,” he says. “As a business owner, we were able to upgrade to a better location. We're currently Class A, but I think we were previously Class C without a significant increase in expenses.”
Estabilo said he hopes the location change will encourage employees to come to work and invest in the community.
“One of the reasons we moved to our current location is because we believe it is a safe environment,” he added. “We're close to the city center, we're close to BART on 12th Street, and people can walk outside to go shopping or get a coffee,” he said.
The numbers are moving in the right direction and experts expect fewer vacancies by the end of the year.
