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suit, remaining the same at 16.6%. As more occupiers move to prime offices in response to the shifting demands of the workforce, this divergence is expected to grow. Prime CBD office vacancy decreased to under 10%, while grade and location across Auckland, Christchurch, and Wellington shows a widening gulf. Vacancy rates in the Wellington market continue at record-lows, in turn driving up prime rents which are forecast to reach $638 per sqm in 2023. Government tenancies continue to be a strong driver for the office market in the capital. Soon-to-becompleted developments at 15 Customhouse Quay will add 3,600sqm of office space in the next few months. Secondary office space in Christchurch showed

increased vacancy from 6.0% to 8.0% primarily due to space arising on Victoria Street. Further out of the CBD, vacancies on Wairakei Road drove secondary suburban vacancies up to 24.4% (a

difference of 13.9%). More than 4,000sqm of office developments are in the pipeline, much of that space pre-leased, with expected completions in 2023 and 2024.

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Retail

While there are signs of recovery appearing, net rents in Auckland CBD decreased over the last quarter. Wellington and Christchurch markets are stable, but what factors should occupiers and investors look at heading into 2023?

Following a whole year of unchanged prime average net rents, Auckland CBD saw a lowering of 6.8% ($175 per sqm) due to the slow rebuilding of city centre foot traffic following the lifting of pandemic restrictions. There remains international interest from retailers in the Auckland CBD, however this interest is pushing into 2023 with some key brands intending to come to market as we experience higher CBD populations across Auckland, Wellington, and Christchurch. In the Wellington retail property market (CBD and southern CBD), vacancies continued their positive (downward) trajectory, dipping below 10% to sit at 9.1% (a change of 4%). With more than $200 million in the Wellington CBD pipeline due to be completed in 2023, retail continues to be

a small component of the developments. Christchurch continues its stable rent outlook, with prime retail space remaining unchanged at $575 per sqm since the third quarter of 2020. Similarly, secondary retail

rates have remained steady at $315 per sqm since the beginning of 2021. Mixed-use developments that include notable retail space around Gloucester Street, Victoria Street, High Street, and Cashel Street highlight the strength of

the Christchurch market and indicate to stable performance for the beginning of 2023.