Auckland CBD office vacancy rose to 16.2 percent in December 2025, up from 14.6 percent in June, according to Colliers’ Auckland CBD Office Report for the first half of 2026. The headline number understates how uneven the market is. Prime grade vacancy sits at 8.5 percent. Secondary stock is driving almost all of the increase.
That divergence is the defining feature of the current Auckland office market, and it has direct consequences for where fitout and refurbishment capital should go.
The current numbers
| Metric | Position | Period |
|---|---|---|
| Auckland CBD overall vacancy | 16.2 percent | December 2025 |
| Previous reading | 14.6 percent | June 2025 |
| Prime grade vacancy | 8.5 percent | December 2025 |
| Average prime net face rent | $566 per sqm | December 2025 |
| Previous prime net face rent | $555 per sqm | June 2025 |
| Average prime incentive | 12.8 percent | December 2025 |
| Prime yields | Around 6.7 percent | December 2025 |
Source: Colliers, Auckland CBD Office Report, First Half 2026.
Two things in that table are worth pausing on. Prime net face rents rose while overall vacancy rose. And prime incentives softened slightly rather than expanding. Both indicate that the top of the market is functioning normally while the bottom is not.
What is actually happening: a flight to quality
Occupiers are simultaneously reducing the amount of space they take and upgrading the quality of the space they take. CBRE research indicates that 29 percent of occupiers plan to reduce their footprint while 39 percent are seeking higher quality buildings.
The logic is straightforward from the occupier’s side. Hybrid working reduced the required desk count, which freed up budget per square metre. That budget is being redirected into better buildings and better fitouts, because the office now has to earn attendance rather than assume it. A workplace that people choose to travel to needs amenity, environmental performance, good light and air, and a fitout that supports collaboration rather than rows of desks.
The consequence for the market is a widening gap. Prime buildings with strong amenity and good sustainability credentials are letting. Secondary buildings without them are accumulating vacancy, and much of that vacancy is structural rather than cyclical. It will not resolve when the economy improves.
Fitout has become a leasing tool
Colliers has noted that landlords are increasingly offering full hard fitouts to attract occupiers. This represents a meaningful shift in how leasing deals are structured in New Zealand.
Historically the standard incentive was rent free time. A landlord funded fitout is different in several important respects:
It is more attractive to the occupier than equivalent rent free. A tenant with limited capital, or one whose board will not approve a capital spend, values a delivered fitout more highly than the equivalent value in free rent, because it removes both the cash requirement and the project management burden.
It supports the face rent. Incentives delivered as capital rather than as rent reduction preserve the headline rent, which supports valuation.
It creates an asset and a liability. The landlord owns a depreciable asset, but also acquires a reinstatement and churn position at lease end.
It shortens the tenant’s timeline. A fitted or partially fitted space can remove two to four months from an occupier’s move, which for a tenant with a lease expiry running down is often the deciding factor.
The trade off is capital exposure. A landlord funded fitout on a short lease to a weak covenant is a poor risk. The structure works best on longer terms with strong tenants, or on generic fitted suites that can be re let to the next occupier without significant rework.
What this means for secondary stock owners
Owners of secondary Auckland office buildings face a clear decision, and doing nothing is itself a decision with a cost.
Reposition. Upgrade the base build and Cat A to compete for occupiers moving up from lower grade space. This is most viable where the building has good bones: floor plate efficiency, floor to ceiling height, natural light and a location that works. The current soft construction market means this work is cheaper now than it is forecast to be, with RLB projecting cost escalation rising from around 1.6 percent at the end of 2026 toward 3 percent and above by 2029.
Convert. Alternative use, most commonly residential or hotel, where the building’s form permits and the planning framework allows. Conversion economics are demanding and require genuine feasibility work rather than optimism.
Hold and accept the position. Viable where the building has a long WALE with strong tenants, or where a sale or development play is planned.
The one option that consistently disappoints is partial, cosmetic upgrade. A repainted lobby in a building with tired services, poor environmental performance and no amenity does not move a building from secondary to prime. Occupiers making a flight to quality decision can tell the difference.
What this means for occupiers
The current market gives tenants leverage, but it is unevenly distributed. In secondary stock there is genuine negotiating room on rent, incentives and landlord contributions. In prime stock, with vacancy at 8.5 percent and rents rising, there is considerably less.
Practical points for occupiers in the current market:
- Start the process earlier than feels necessary. A relocation with a fitout is a 6 to 12 month exercise, and leaving it late removes your options and your leverage.
- Ask for a landlord funded fitout explicitly. It is now a normal part of the negotiation and many landlords will consider it.
- Assess the Cat A critically. A floor that has been vacant for a long period may need remedial work before your fitout can start.
- Negotiate the make good position at heads of terms, not at expiry.
- Model the total occupancy cost including fitout capital, not just the rent per square metre.
Frequently asked questions
What is the office vacancy rate in Auckland CBD? Colliers reported Auckland CBD overall office vacancy at 16.2 percent in December 2025, up from 14.6 percent in June 2025. Prime grade vacancy was considerably lower at 8.5 percent, with secondary stock driving most of the increase.
What are typical office leasing incentives in Auckland? Colliers reported average prime incentives at 12.8 percent in December 2025, slightly softer than the previous period. Incentives on secondary stock are generally higher and more negotiable. Incentives are increasingly being delivered as landlord funded fitout rather than as rent free periods.
What does flight to quality mean in commercial property? It describes occupiers moving from lower grade buildings into higher quality ones, often while reducing their total footprint. CBRE research indicates 29 percent of occupiers plan to reduce space while 39 percent are seeking higher quality buildings. It concentrates demand into prime stock and leaves secondary buildings with structural rather than cyclical vacancy.
Is now a good time to refurbish a commercial building? Construction tender pricing is currently competitive and cost escalation is forecast to rise from the second half of 2026 onward, which argues for acting sooner. Set against that, leasing risk on secondary stock is elevated. The decision should be modelled on the specific asset, its bones, its location and a realistic view of who the target occupier is.
Are office rents falling in Auckland? Not at the prime end. Colliers reported average prime net face rents rising to $566 per square metre in December 2025 from $555 in June. Secondary rents are under more pressure, and effective rents across the market are lower than face rents because of incentives.
Related reading
- Cat A vs Cat B Fitout: What NZ Landlords and Tenants Need to Know
- Seismic Strengthening and Earthquake Prone Buildings: The 2026 Position
Sources
- Colliers, Auckland CBD Office Report, First Half 2026
- CBRE, occupier sentiment research
- Rider Levett Bucknall, New Zealand Trends in Property and Construction Forecast, Report 114
Refresh schedule: this article contains time sensitive market data and should be updated on publication of each new Colliers, JLL or CBRE Auckland office market report, and at minimum every six months.
This article is general information and not investment advice.