City Rail Link opening sparks office market revival in Auckland's Midtown, CBRE says

HouGarden New Zealand, 21 September — In a report titled 'Real Estate Impacts of the City Rail Link', CBRE — one of the world's largest commercial property services firms — argues the newly operational rail loop will give the core CBD office market its strongest demand boost in a decade. The report was supplied by CBRE and carries the firm's commercial interests, a factor readers should weigh when assessing its conclusions.

The research focuses on Auckland's Midtown — the corridor running roughly from the mid-section of Queen Street up to Karangahape Road — and in particular on Te Waihorotiu Station, one of the CRL's key new underground stops, positioned at the heart of that precinct.

Tamba Carleton, CBRE's research director and the report's author, said the property consequences extend well beyond faster commutes. 'Accessibility is a primary influence on land use, property values and the spatial pattern of new development,' he said. 'For prime CBD office space, we expect to see absorption, a flight to connectivity and rental recovery.'

Carleton said the secondary office market faces a more mixed outlook. 'In the secondary office market there will be some bifurcation, where redeveloped assets will benefit from increased demand and others may face obsolescence,' he said. In practice, that means older, unrenovated buildings away from the new stations risk losing tenants to refurbished stock positioned closer to CRL access points.

Campbell Pritchard, national director of office leasing at CBRE New Zealand, said Midtown would become a renewed centre of activity, with Te Waihorotiu Station as its focal point. 'Fanning out from the station entrances, the CRL will have a positive impact on vibrancy and amenity,' he said. 'This is a great opportunity for landlords to redevelop and reposition office space close to the stations.'

Several building owners near the new stations have already moved. Investment group PAG has refurbished Mosaic, a 17-level office building on Wakefield Street. Developer Quattro Alberts is repositioning the 13,000-square-metre Bledisloe House directly beside Te Waihorotiu Station. Developer and investor Roxy-Pacific is redeveloping the twin towers at 205–209 Queen Street.

Pritchard said the upgrade activity was notable even before the CRL's opening. 'There has already been a notable push to upgrade A and B-grade buildings near the CRL stations and turn them into attractive leasing propositions. This activity is expected to ramp up now that the CRL is open,' he said.

With premium and A-grade waterfront buildings — which have absorbed the bulk of office demand in recent years — now largely full, Pritchard said tenants considering Midtown space could gain an edge by acting early. 'There will be some first-mover advantage. Occupiers who jump on the opportunities first may secure some strong deals in their favour, before the market swings towards landlords as vacancy is absorbed and the benefit of being close to the stations is proven,' he said.

On the investment side, Brent McGregor, executive chairman of capital markets at CBRE New Zealand, pointed to the CBRE-brokered sale of 99 Albert Street to investment firm Mainland Capital as evidence that the CRL effect has already reached the transaction market. The building sits on the doorstep of Te Waihorotiu Station. 'The imminent opening of the station made a significant difference to the breadth and depth of bids we received,' McGregor said. 'The interest in this asset included three different use proposals for the building, with capital from private investors, offshore and domestic institutions and private equity.'

McGregor said leasing activity would be the definitive test. 'The real proof of the location will be in the leasing activity. Once we have a critical mass of occupiers who put their stake in the ground and vouch for the midtown area, more investors will follow and we're excited to see the evolution of the district as investment activity increases,' he said.

Quattro Alberts offers the most concrete data point so far. The company's Formery by Alberts development, located across the street from a Te Waihorotiu Station entrance, is fully leased across 10,000 square metres. Managing director Mark Gedye said the result validated the case for Midtown office space. 'Every floor we've developed is fully leased, totalling 10,000 square metres, and we're now accelerating the next floors to keep pace,' he said. 'Thirty per cent of our tenants at Formery have come from fringe locations and the CRL has been a significant factor in their decisions.'

Bledisloe House, the company's separate 13,000-square-metre refurbishment beside the station, is 20 per cent leased with strong enquiry reported, Gedye said. He said Quattro Alberts committed to Midtown ahead of the CRL's completion. 'We invested in Midtown well before the CRL opened because we could visualise the opportunity created by the combination of better accessibility and the public and private investment happening across the precinct,' he said.

Gedye said Quattro's strategy is to repurpose existing buildings into workplaces that give employees a concrete reason to commute. Design, hospitality, wellness, amenity and community are the stated priorities. 'As the CRL opens up midtown to more of Auckland, we expect that flight to experience to accelerate, with an anticipated 60 tenancies pulling in hundreds of office workers just from Bledisloe House alone once fully leased,' he said. 'The buildings that combine great connectivity with a genuinely compelling workplace experience will be the ones that benefit most.'

For investors with an interest in Auckland commercial property, the CBRE report — read alongside its source — points to Midtown as a precinct where CRL-driven demand is already influencing both leasing decisions and transaction pricing. Whether those trends broaden beyond early-mover projects will depend on how quickly vacancy in upgraded stock is absorbed once the station's full catchment is in play.