Love Your Workspace Christchurch Issue #1 2023

Cover and above:

151 Cambridge Terrace, Christchurch Central

Is the traditional office dead? Is the best way to attract people back into the office to provide a great workplace?

Rebuilding The Regent Tenants rush in for office space in new building planned for Cathedral Square.

CBRE Research’s insights Limited Christchurch CBD office availability, despite small vacancy increase.

Dominant Presence

Striking presence on Cashel Street

170 CASHEL STREET, CHRISTCHURCH CENTRAL

With a targeted completion Q3 2024, developed by Carter Group and designed by Wilson & Hill, the four-level building will sit proudly on the former Holiday Inn site, at the corner of Cashel and High Streets. This high-profile location will consist of high-end retail at ground level and A-grade office on the floors above. The 787sqm* tenancies provide great efficiency to office occupiers, allowing an agile workspace with natural light. These efficient floor plates are complemented with staff facilities as well as basement car parks, with other public parking options within close proximity.

170 Cashel Street will be the pinnacle of the Retail Precinct, providing a dramatic finish to Cashel Street and along with the Te Kaha Multi-Use Arena, further revitalising the CBD’s east frame.

AVAILABLE FOR LEASE

Level 3 787sqm*

Level 2 787sqm*

Level 1 787sqm*

Car Parks 14 basement car parks with an additional 16 on grade

Naming Rights Available

www.cbre.co.nz/CCH100128

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

* Approx.

The Regent – Cathedral Square

33 CATHEDRAL SQUARE, CHRISTCHURCH CENTRAL

The most prominent commercial site in the city, the Regent Building is set to be reborn with completion expected Q1 2024. This significant office development provides occupiers a chance to re-enter the historical heart of Ōtautahi and secure a renowned position within the city that cannot be replicated. The building, designed by award-winning architects, Wilson & Hill, will consist of retail located on the ground floor and multiple premium grade office floors. Secure on-site car parking has been incorporated into the design.

AVAILABLE FOR LEASE

Level 3 Leased

Level 2 Leased

Level 1 477sqm*

Car Parks 35 car parks

www.cbre.co.nz/CCH100249

Please contact your agent for more information

Mitchell Wallace

mitchell.wallace@cbre.co.nz

+64 27 664 4773

Rare West-End Character Building

64 GLOUCESTER STREET, CHRISTCHURCH CENTRAL

The north-facing suite comprises a large board room, two office/meeting rooms, reception area, large open plan work space, and spacious kitchen. There are heat pumps throughout with bathrooms including a shower at the rear of the tenancy. The building has a seismic rating of at least 67%* and provides good on-site car parking and bike storage.

AVAILABLE FOR LEASE

Level 1 290sqm*

Car Parks Two (2) single parks and four (4) tandem bays

www.cbre.co.nz/CCH100114

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

Why quality workspaces are now a baseline requirement

By Kirstin Cooper Senior Workplace Consultant, CBRE

Is the office dead? Our latest research shows that occupiers may be holding station while they try to unpack what new ways of working mean for their workplace.

The prevailing market and media view over the last couple of years has been a pessimistic one, with commentators quick to declare ‘the office is dead’ and speculating that organisations will significantly reduce their footprint due to remote and hybrid working practices.

However, while we are undeniably living in a new working world, the fairly conservative 12% space reduction shown in research suggests that occupiers may be holding station while they try to unpack what new ways of working mean for their workplace.

Occupiers continue to grapple with the evolving state of the hybrid working debate and it is clear that no one has all the answers yet. There is a general reluctance to require employees to come back into the office full time, with the majority of employers expecting their people to come in around three days per week. But who’s to say that this may not change again in future? What we are generally seeing is that strongly mandated approaches to hybrid working by employers have not been particularly successful and that more flexible approaches have achieved better outcomes.

What we do know is this: quality workspaces are now a baseline requirement. Global research is showing a common emerging theme - that the best way to attract people back into the office is to provide a great workplace experience. This means we are seeing a shift from forcing people back into the office to attracting them in through design and experience. A shift from push to pull, working to develop the power of the office as a magnet.

There is also a different level of expectation about what the workplace must provide. In additional to functional spaces, occupiers now need to attract people into the workplace through design and amenity. The flight to quality shown in our latest research reflects just that: occupiers recognise that it is no longer sufficient to provide a basic workplace, and that attraction and retention are a critical factor in workplace decisions.

At CBRE, we partner with organisations to take a wellconsidered, structured approach to determining their future workplace requirements. The recent data suggests that because occupiers don’t have all the answers yet, they want the ability to expand and contract, allowing flexibility if new ways of working continue to evolve and change.

Because there is so much yet be learnt in this space, the question we hear most often from clients is ‘what is everyone else doing?’. To help answer this, CBRE NZ’s Associate Director of Research, Gergely Gaspardy and I have conducted a NZ Future of Work Study, surveying occupiers to examine patterns of working, workplace design and real estate strategy. We were thrilled to receive responses from over 65 organisations across Auckland, Wellington and Christchurch, who occupy approx. 250,000sqm of office space and represent a “Who’s Who” of occupiers.

Preliminary analysis has identified some interesting themes and patterns. For example, 65% of respondents indicated that people in their organisation work remotely 2-3 days per week, and over 70% of participants described the cultural impact of hybrid working as “positive” or “somewhat positive”. When asked about current or future real estate strategies, nearly half of the respondents selected “relocating to better quality space”.

We look forward to sharing more insights in the coming months, which can help all businesses make better commercial property decisions and create workplaces where everyone can thrive. While the study is now closed, please contact Gergely, one of our agency team, or I if you would like to compare your business against the full response set or against your specific industry.

The flight to quality shown in our latest research reflects just that: occupiers recognise that it is no longer sufficient to provide a basic workplace, and that attraction and retention are a critical factor in workplace decisions.

Flexibility at Scale

South frame CBD positioning

68 SAINT ASAPH STREET, CHRISTCHURCH CENTRAL

Commandingly positioned on a key corner of the CBD’s South Frame, 68 St Asaph Street sets the southern border of the city’s Health Precinct. This precinct has become a collaboration of private and public sectors as key health infrastructure sits alongside significant private investment like Otago University’s $178m Christchurch Campus currently under construction. The property therefore lends itself to tenants within the health sector, though this does not preclude other industries from taking up the opportunity.

Constructed by Calder Stewart as a temporary police station and then repositioned as a medical & tech hub, the 7,442sqm* structure features multiple points of entry and egress both into the site and building, minimal structural columns and an appealing central courtyard.

AVAILABLE FOR LEASE

Ground Floor 1,920sqm*

www.cbre.co.nz/CCH100125

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

The Wright Choice – Quality Office

110 WRIGHTS ROAD, ADDINGTON

Located on the north-eastern side of Addington Raceway, these high quality premises provide occupiers with outstanding views, excellent accessibility and a flexible, utilitarian existing fit-out. Available immediately, the Sheppard & Rout designed building displays a feature staircase as an alternative to the lift when you enter the main lobby. Each floor has two points of entry off the lobby and independent ablutions. The ground floor tenancy, with a separate entrance, is completely open plan. Levels one and two each feature meeting rooms/ offices alongside significant open plan working areas and enjoy balconies overlooking the racecourse.

AVAILABLE FOR LEASE

Level 2 534sqm* plus balconies

Level 1 534sqm* plus balconies

Ground Floor 423sqm*

Car Parks 45 on-site car parks

www.cbre.co.nz/CCH100247

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

High Profile Office on Blenheim

UNIT 2, 245 BLENHEIM ROAD, RICCARTON

Located on the south side of Blenheim Road in the heart of Middleton, this office building enjoys a level of profile that is almost unmatched in Christchurch. Middleton, a significant mixed-use area, has long been a favourite location for occupiers who require great access and visibility at a cost-effective rent. Blenheim Road is home to major office tenants such as AON Insurance & Calder Stewart and key retailers like The Warehouse and McKenzie & Willis, further proving the strength of the location.

AVAILABLE FOR LEASE

A rea 422sqm*

Car Parks Nine (9) on-site car parks

www.cbre.co.nz/CCH100207

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

Office with River Views

Leafy outlook along Avon River

12 OXFORD TERRACE, CHRISTCHURCH CENTRAL

Situated on the south bank of the Avon River at the edge of the Health Precinct and West End, this +MAP Architects designed office building enjoys a leafy outlook along Oxford Terrace, a highly sought-after vista.

The landlord has taken care to ensure the property has a premium feel. Bespoke finishes can be found throughout the common areas, while the ground floor entranceway has been finished to impress both staff and visitors. Each floor of the building benefits from a high-quality base build and natural light on three sides. Levels 4 and 5 impress with a feature terrace and balcony respectively, offering unmatched entertainment space for staff and clients.

12 Oxford is neighboured by the historically listed Pegasus Arms Public House, with the Boatshed Café, Eats on Oxford and Riverside Market all within a short walk of the property.

AVAILABLE FOR LEASE

Level 5 283.1sqm* office area plus 19.4sqm* balcony

Level 4 283.1sqm* office area plus 59.6sqm* terrace

Level 3 346.4sqm*

Level 2 346.4sqm*

Level 1 346.4sqm*

Naming Rights Available

Ground Floor 45.6sqm*

Car Parks Nine (9) secure car parks

www.cbre.co.nz/CCH100076

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

Construction is now underway on the four-level building, to be known as The Regent, which is being developed by prominent local property investor Carter Group. Representing a significant first step in Christchurch’s next development cycle, office space in the building at the site of the former Regent Theatre, on the southwest corner of Cathedral Square, is now almost fully precommitted, with only half a floor left available.

Designed by Wilson & Hill Architects, the building will help to reinvigorate a part of the CBD which has remained relatively under-utilised since the Canterbury Earthquakes. Prior to 2011, Cathedral Square was a tourist hot spot and home to major office occupiers such as ANZ, The Press and Grant Thornton. However, private investment in the Square post-quake has been hindered by uncertainty around Christchurch City Council’s redevelopment plans for the area, along with protracted insurance settlements and a lack of demand for more office space. The current office market, with low vacancy, rising rents, and significant public investment in sites surrounding the Square have recently alleviated most of these concerns.

Levels two and three of the nearly 4,000sqm property are leased to two national law firms, each taking a floor, while a smaller, local firm will occupy the prime, cathedral-facing, corner on level one. Ground floor retail and hospitality front Cathedral Square and Worcester Boulevard, with secure car parking accessed via a laneway to the west of the building.

Mitchell Wallace, Associate Director of Office Leasing at CBRE Christchurch and leasing agent for the development, says the agreements with the three office tenants mean that 83% of the building’s available office space is now pre-committed.

This building is the first major new office development in Christchurch’s CBD since Spark Square, also located in Cathedral Square, which was completed in 2020. Strong interest from tenants has resulted in very successful pre-commitment, giving Carter Group confidence to proceed with construction of the building.

Tenants rush in for office space in the new building planned for Cathedral Square

“This building is the first major new office development in Christchurch’s CBD since Spark Square, also located in Cathedral Square, which was completed in 2020. Strong interest from tenants has resulted in very successful precommitment, giving Carter Group confidence to proceed with construction of the building.”

The Regent, which is expected to be complete in the first quarter of 2024, is the first in what is expected to be a new wave of office development projects in Christchurch CBD, says CBRE Associate Director of Office Leasing, Adam Wallis.

“This development, and its successful precommitment to date, is likely to give other prospective office building developers the confidence to start planning future projects to help address the severe shortage of office space in central Christchurch.”

The extremely low levels of office vacancy, paired with a number of larger tenants facing upcoming lease expiries, has resulted in an unprecedented demand for office space, says Wallace.

“Several blue chip tenants are approaching the end of their current lease terms and are looking to move or expand. With the supply of office space in the CBD now highly restricted, competition is very strong for the limited space that is available for immediate occupancy.”

Christchurch CBD office vacancy was 5.9% in December 2022, significantly lower than the pre-earthquake level of 10.1% recorded in 2010, according to CBRE Research.

“Superbly positioned directly facing the Christ Church Cathedral across the open public space of the Square and just south of Te Pae Christchurch Convention Centre, this stunning building will take pride of place among some of Christchurch’s most iconic landmarks in the heart of the city.” adds Wallis.

Foundation works have begun on-site

Premier Address – River Outlook

CAMBRIDGE TERRACE, CHRISTCHURCH CENTRAL

Standing proud on the corner of Gloucester and Durham Street North, the striking, Jasmax-designed building captures your attention with its distinctive rippling façade. One of the first buildings to be constructed along the Avon, the Deloitte building enjoys premium features and outstanding amenities. Basement parking and End of Trip facilities complement river views and high-quality finishes. The available tenancy on Level 1 enjoys a fantastic outlook over the Avon and benefits from a complete base build that can be easily altered to suit a fitout. Test fits can be made available to genuinely interested parties.

AVAILABLE FOR LEASE

Part Level 1 303sqm* including share of common

Car Parks Available

www.cbre.co.nz/CCH100252

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

151

Quality Office on Airport Campus

17 RON GUTHREY ROAD, HAREWOOD

Located on the Christchurch International Airport campus, these well designed and thought-out premises provide occupiers with a turnkey office solution that is convenient to the airport terminal and easy access to the motorway. Highly sought-after and available immediately, the building features open-plan work areas, thoughtfully laid-out meeting facilities and a large staff kitchen area. Dual client entrances allow flexibility in your use while a small warehouse area with additional mezzanine are accessed via a roller door on the northern wall. Significant on-site car parking is major bonus to all users.

AVAILABLE FOR LEASE Office 422sqm* Warehouse 100sqm*

Mezzanine 35sqm*

www.cbre.co.nz/CCH100244

Mitchell Wallace

mitchell.wallace@cbre.co.nz

+64 27 664 4773

Hamish Clarke

hamish.clarke@cbre.co.nz

+64 21 960 655

Please contact your agent for more information *

Outlook with Full Fit-out

Exceptional office space

299 DURHAM STREET SOUTH, CHRISTCHURCH CENTRAL

299 Durham Street provides prospective tenants with a bare shell and full-fit out office options in a location where opportunity is limited at the smaller end of the market. Situated on the northwest corner of Durham and Armagh Streets in the CBD’s Westend, the property is well placed to enjoy the best the city has to offer. Te Pae Convention Centre sits just across the river, while Riverside Market, Hagley Park and the Town Hall are all within 10 minutes’ walk. Access in and out of the city is convenient via the city’s one-way system.

The ground floor tenancy is provided as a bare shell and, with its high ceilings and abundant natural light, would ideally suit an occupier with an open plan workspace typology. Alternatively, service retailers such as real estate agencies, property management firms or travel agents would be able to make excellent use of the tenancy’s street appeal. Level 3 is the ultimate corporate office, with high ceilings, unobstructed floor to ceiling windows and a full fit-out in situ. North and west facing terraces provide a point of difference when it comes to client entertainment and staff amenity.

www.cbre.co.nz/CCH100248

Please contact your agent for more information

Mitchell Wallace mitchell.wallace@cbre.co.nz

+64 27 664 4773

Limited CBD office availability, despite small vacancy increase

New data out from CBRE Research shows a slight increase in office vacancy in the Christchurch CBD, where tenants have been struggling to secure space in an extremely tight market.

CBD office vacancy as at December 2022 was 6.5%, up from 5.8% six months earlier, mainly due to yet-to-be-occupied stock additions, according to CBRE’s latest Christchurch Figures data.

However, while the numbers would suggest the shortage of office space easing, in reality the market remains just as difficult for most tenants looking to move or increase their footprint, says Mitchell Wallace, Associate Director – Office Leasing in CBRE’s Christchurch office.

“Some more space is now available in larger floor plates, which has caused the official vacancy rate to edge upwards. However the situation is still extremely difficult for tenants requiring spaces of around 500sqm, which is the most highly sought-after section of the market among Christchurch office occupiers.”

Unlike Auckland, with its high proportion of national head offices; and Wellington’s many large government occupiers, the most common size requirement for office tenants in Christchurch is smaller – leaving occupiers scrambling to secure spaces of the appropriate size while some large floor plates remain vacant, Wallace says.

“We are aware of a significant number of tenants looking to move into the CBD or change their existing office space requirements, and there is very little to offer them. Many owners of larger office buildings prefer to wait for a single larger occupier rather than splitting floors for smaller tenants, which incurs a higher management burden.

“The situation isn’t expected to ease until 2024 at the earliest, when the first of the next round of new office developments enters the market and the tenants moving into them create backfill vacancies in their current premises.”

Mitchell Wallace Associate Director – Office Leasing, CBRE

Some more space is now available in larger fl oor plates, which has caused the official vacancy rate to edge upwards. However the situation is still extremely difficult for tenants requiring spaces of around 500sqm, which is the most highly sought after section of the market among Christchurch office occupiers.

235 High Street

170 Cashel Street

211 High Street

Five new buildings currently in the planning and leasing phases are expected to add around 22,000sqm of high quality office stock to the Christchurch CBD office market from 2024. These are:

– The Regent, Cathedral Square under construction by Carter Group

– 170 Cashel Street planned by Carter Group, currently marketed for lease

–

211 High Street under construction by Portus Property

– 38 Oxford Terrace health-related development planned by Huadu Group

– 235 High Street is a staged development by QB Studios incorporating refurbishment of an existing building (underway) and adjoining new construction.

In addition, a major refurbishment of the 14,000sqm ex-IRD building at 224 Cashel Street by Huadu Group is underway. CBD office vacancy remains historically very low, compared with the post earthquake high of 16% in December 2018 and still well below pre-earthquake levels.

*Map and labels are approximate

The Regent

38 Oxford Terrace

Christchurch CBD office vacancy

CBD office rents

Annual rents for Christchurch CBD office spaces remained stable in the fourth quarter of 2022, following significant increases over late 2021 and early 2022. Notably, CBD office rents are still at record highs, with the $368/sqm recorded in December 2022 for prime CBD offices 12.6% higher than the end of 2021. CBD secondary grade rents were 11.8% higher, at $307/sqm. Incentives remained a feature of the market throughout 2022 and are at 4.6% of face rents.

12.6% 11.8%

December 2022 prime CBD offices rent December 2022 secondary grade CBD offices rent higher than the end of 2021 higher than the end of 2021

Suburban offices

The suburban office market is a beneficiary of the shortage of CBD office space. Suburban vacancy is now 7.8%, following a steady decline since vacancy peaked at around 19% in December 2016. Rents were unchanged in Q4 2022, following robust rental growth in Q3, where prime rents grew by 2.1% and secondary by 5.3% compared with the previous quarter. Suburban prime net effective rents are at $240/sqm, up 5.1% compared with the end of 2021.

Leasing transaction timeframes

In a market where CBD office space remains in very short supply, CBRE is advising tenants looking at changing their space requirements to aim to complete their decision making process within a six month time frame, Wallace says.

“Around five to six months in advance of lease expiry is optimal for tenants to engage with us and commence the process towards securing new premises. We have seen tenants who have signed new leases too early being disadvantaged by changes that can occur in the market. Our advice is to still engage early, but try to limit decision making timeframes, which gives a greater chance of successfully negotiating a new lease deal.”

Christchurch suburban office vacancy

Around five to six months in advance of lease expiry is optimal for tenants to engage with us and commence the process towards securing new premises. We have seen tenants who have signed new leases too early being disadvantaged by changes that can occur in the market. Our advice is to still engage early, but try to limit decision making timeframes, which gives a greater chance of successfully negotiating a new lease deal.

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If you’re considering your options in Auckland or Wellington, we have a team of experts to find the best solutions for you and your business. Contact one of our office leasing specialists today.

There’s potential in every space.

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