Much more business land needed to provide jobs

2:52 PM Wednesday August 27, 2014 Colin Taylor

Street level view of vacant development site at 11 Athy Place in the Bolderwood industrial subdivision in Wiri – one few large industrial land sites left in Auckland

A significant increase in business land for development is needed so this critically important sector of the economy can expand to provide jobs and support services for Auckland’s growing population, says John Church, national director commercial and industrial, for Bayleys Real Estate.

“The greatest demand is for more industrial land,” Church says in Bayleys’ latest Greater Auckland magazine. “Office developments can go upwards and are likely to be adequately catered for in the metropolitan and town centres and CBD zone that will be established under the proposed Auckland Unitary Plan. However, industrial buildings take up much larger chunks of land, not only for the premises themselves but also for the surrounding yard space needed for truck manoeuvring and storage.”

A recent report compiled by Auckland Council staff indicates the existing supply of industrial land will run out within the next 10 years and maybe a lot sooner if land absorption continues to pick up as it has done over the past year or so, says Church. “Exacerbating the issue is the fact that the majority of the land that is available comprises small, fragmented sites not suited to the needs of medium to large scale distribution and manufacturing businesses.”

The proposed Unitary Plan has earmarked an additional 1000 hectares of greenfields land for future industrial development. Most of this will be located within 6500 hectares of new Future Urban zone greenfields land in Warkworth and Silverdale, Northwest Auckland and in South Auckland which will also cater for significant residential development of 67,000 to 90,000 new dwellings.

But Property Council and vocal Auckland councillors such as Cameron Brewer and Dick Quax doubt whether 1000 hectares of new industrial land will be enough.

“As it will involve converting rural land and lifestyle blocks, it is also likely to meet with local community development opposition as has already been the case in Drury, which will test Auckland Council’s resolve,” says Church.  

True Commercial - John Church, Bayleys.jpg (2)

John Church comments: ‘the existing supply of industrial land will run out within the next 10 years and maybe a lot sooner’

“In the short to medium term, the business land shortage is benefitting owners of strategic holdings, with the land sales sector of the market red hot at the moment. Buyers comprise a mixture of developers who are mostly undertaking design build projects for committed tenants, and some owner occupiers and investors or land bankers who are prepared to accept little or no income from a property in the expectation that the land will continue to appreciate in value. This is likely to be the case for some time, as demand for well located, large sites continues to outstrip supply and as strong competition for the limited offerings that are being brought to market pushes prices up.

“In the longer term, however, Auckland does need an adequate supply of business land if it is to prosper and the property market also benefits from the development of new investment opportunities. It is therefore in everyone’s interests to keep the pressure on Auckland Council to ensure this happens.”

A report, prepared by council principal advisor David Taylor and presented to the council’s Economic Development Committee, indicates the region has a significant shortage of sites over five hectares for new business growth. “Therefore the identification and protection of new land extensive business land opportunities, such as the proposed scheme at Drury South, is critical to ensuring the region meets expected industrial business land needs over the next 30 years,” the report says. If this is not done, the report warns there will be a point where the region begins to run out of business land.

Property Council New Zealand agrees saying a failure to identify and allocate sufficient land for business development, with speed, will have disastrous consequences by stifling the region’s economic growth. It says the situation could be worsened by residential building activity occurring on land where business activities should logically take place, dampening commercial growth.