JLL, a global investment management firm specialising in real estate services, says the tech hub market in Auckland is booming and reshaping demand for commercial real estate, but there is a shortage of properties suited to early-stage startups.
JLL has released a whitepaper ‘Sustaining momentum: The role of property in the tech hub puzzle’ on the rise of 'tech hubs' in Auckland and their impact on the commercial property market. It identifies Albany, Takapuna, the CBD fringe, Onehunga, Glen Innes and Manukau as locations that have the right characteristics to appeal to new tech companies.
According to JLL, Auckland's tech sector experienced nearly 26 percent growth in GDP in the last five years, and innovation hubs have emerged across the city including significant concentrations of activity in the CBD, Parnell and across the North Shore. “In the Wynyard Quarter, the rapid emergence of the GridAKL innovation precinct has set the benchmark but exciting new spaces are also emerging at Eden Terrace and Smales Farm,” it says.
However, the white paper says there appears to be a gap in the market in Auckland for startups as they gain traction and go through a growth stage and begin to operate as their own entity without support.
“Office space with particular characteristics is sought after by start-ups going through this growth phase, to ensure they have the right environment to incubate and grow without too much strain on the company’s turnover,” JLL says.
“There appears to be a gap in that market, especially in Auckland. Ultimately these companies are still working on a tight budget and until they are self-funding need real estate at an acceptable price point so they can continue to grow. The market will need to adapt to meet these needs in the short and long term through real estate innovation.”
It adds that the real estate industry will also need to adapt to meet the needs of successful, growing startups. “Once a start-up has grown enough to become a corporate occupier, character space offering a funky environment is generally preferred to a typical office setting
“A start-up that grows to become a successful company will often seek space in the general vicinity of the tech hub it originated from. This will enable them to retain their relationships and links to infrastructure and potential clients.”
JLL anticipates more innovation hubs and tech precincts popping up saying: “There is a technology revolution occurring with jobs being replaced in every sector and industry. Many companies are adapting and moving into the tech sector to stay ahead of the game. As Generation Z comes into the job market, tech offerings and tech-based careers will be the norm. These people will be much more media and computer savvy than previous generations.”