Bayleys sheds light on the real cost of occupancy

Operating costs are moving firmly into the spotlight across Auckland’s commercial property market, with new benchmarking data from Bayleys Real Estate revealing that outgoings are frequently rising faster than inflation, creating growing cost pressures for both investors and occupiers.

The firm’s Auckland Office Outgoings Benchmarking Report, the first comprehensive market study of its kind since 2019, shows average office outgoings of $137 per square metre, up 6.8 percent year-on-year across a dataset of more than 50 buildings.

Findings from its recently released Auckland Industrial Outgoings Benchmarking Report indicate a similar trajectory from a lower base, with average industrial outgoings of around $33 per square metre across 74 properties, rising 6.6 percent annually.

Bayleys head of insights, data & consulting, Chris Farhi, says the research highlights the growing pressures facing occupiers.

“Under most Auckland leases, tenants are responsible for both rent and outgoings. While market conversations tend to focus on headline rent, operating costs can represent a substantial portion of total occupancy expenses.

“Our research also found significant variation in outgoings between buildings, suggesting these costs are far less uniform than industry anecdotes might imply.

“Benchmarking provides owners and occupiers with the context needed to make informed decisions, particularly in a market where operating expenses are rising, and efficiency is becoming a competitive advantage.”

The research draws on operating cost data across a diverse mix of office and industrial properties, providing insight into how expenses are distributed and where cost pressures are emerging.

Bayleys insights, data & consulting analyst, Samantha Lee, says the breadth of the dataset allows meaningful comparisons across building types, sizes and quality grades.

“The data covers a wide cross-section of Auckland assets, including green-certified buildings, giving us a clear view of how operating costs vary across the market,” Lee says.

“Industrial outgoings can vary significantly between buildings. Averages are useful, but the distribution of results is equally valuable for owners wanting to understand how their property performs relative to comparable assets.”

The research confirms local authority rates remain the largest component of outgoings across both office and industrial assets, while utilities are among some of the fastest-rising cost categories.

Bayleys insights, data & consulting analyst, Eos Li, says understanding how those costs are structured is just as important as the overall total.

“Rates continue to represent the largest share of operating expenses, but utilities are climbing rapidly. Energy-efficient buildings can reduce power consumption; however, that doesn’t necessarily translate into lower overall outgoings,” Li says.

“Premium locations and higher-value assets often carry higher rates and service levels, which means the composition of costs matters just as much as the headline figure.”

The findings underline the importance of detailed data and disciplined asset management in a market where operating expenses are becoming a defining factor in leasing competitiveness and long-term investment performance.

Farhi says benchmarking initiatives play an important role in improving transparency and decision-making across the sector.

“Reliable market data allows owners to benchmark their assets, identify opportunities for optimisation, and have more informed conversations with tenants, suppliers and investors,” he says.

The full Auckland Office and Industrial Outgoings Benchmarking Reports are available exclusively to contributors. Property owners and managers interested in accessing the reports are invited to contact the Bayleys Insights, Data & Consulting team to learn how they can participate in future benchmarking initiatives.

For more information, please contact: insights@bayleys.co.nz