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Most IT firms in Auckland prefer suburbia than the city for office space: CBRE New Zealand

Divina Paredes | June 4, 2014
Location is often determined by the area where most employees live, says CBRE New Zealand

Location over quality

Gaspardy says that when it comes to quality grade, IT people are less concerned than other sectors about office grading. There seems to be more of a focus on workplace culture and informal incentives such as staff get-togethers and meals.

"While of course there are other organisational factors at play for the IT sector, this attitude towards office grading may be part of the reason why lower quality grade is the majority not only in the sector's occupied stock but also in their latest demand, as we've seen in the second half of 2013."

Interestingly, says Gaspardy, the majority of IT firms (157) take up to 500 sqm of office space, and only two firms occupy spaces over 5,001 sqm.

"Part of the reason that the majority of firms within the IT sector often require less than 500 square metres for their offices is that many IT businesses are small to medium in size, and of course the IT sector has a healthy and growing number of start-ups, probably more so than most other sectors.

"When compared to the public sector, finance and health organisations — which as a rule tend to have more staff and therefore have larger space requirements — it makes sense that the IT sector demand for office space is generally more compact in size."

CBRE expects more movement in demand for property from the sector, citing the latest report from the Ministry of Business, Innovation and Employment that IT salaries are twice the national average, and growing faster than the average. The MBIE report also cited almost half (47 per cent of all IT services invested in expansion in 2012, compared to 33 per cent average rate across New Zealand business. This indicates an active and growing market, says CBRE.

Gaspardy says the CBD office market is emerging as the most supply-constrained over the near term, and across Auckland, high levels of confidence and strong positive sentiment are evident.

"This puts further pressure on existing stock, which is why we are seeing a raft of professional services — such as IT — moving to the suburban areas of Auckland to alleviate some of the higher costs associated with the CBD core."

CBRE says IT firms must keep in mind the sector as a whole is growing over the next year. This will drive requirements for staff and office pace.

With expansion, consolidation and relocation due to growth influencing many firms property requirements, Gaspardy says IT business owners and managers need to be aware of the office market, locations and availability. He says this way, If and when the need for new or different space arises, the move can happen quickly, efficiently and with minimal downtime for operations and service delivery.


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