Property – Refurbishment's the secret to win tenants.

A new category of office building is emerging as businesses look to upgrade but cannot find vacancies in top-grade prime buildings.

The new category sits between prime and secondary buildings – it consists of sought-after refurbished secondary offices.

Property consultancy CB Richard Ellis research director Zoltan Moricz said prime and secondary buildings could be poles apart in terms of quality.

"Some of the secondary space is not attractive for occupiers. Even tenants that don’t want to be in a prime building don’t want to be in a tired space,” Mr Moricz said. "It’s a nice in between.”

The Q&V building on Auckland’s Queen St was bought almost vacant with only ANZ Bank (on the ground and first floors.) The buyer refurbished the building, brought in tenants, and sold it for $33 million – a price that reflected a good return. A potential secondary refurbishment is the former Simpson Grierson building on Albert St.

Mr Moricz said businesses wanting to move up the office ranks were willing to pay a little more for a secondary refurbishment.

Prime buildings fetch between the high $260s and $400 per square metre, and secondary buildings can expect to get mid to high $100s. Refurbished secondary buildings attract rents between these two at the mid $200s.

However, vacancy rates for refurbished secondary buildings are expected to reflect their scarcity. In CBRE’s latest research, prime office vacancies sat between 3% and 4%, while secondary office vacancies reached over 10%.