Land lack a catalyst for novel ‘car yards’

5:00 AM Saturday December 5, 2015 Colin Taylor

Giant Japanese car seller Gulliver International Co Ltd has leased most of this former Morgan Furniture Lazy Boy manufacturing property at 217-222 Archers Rd.

A shortage of affordable business land in Auckland and the increasing trend towards purchasing vehicles on line is having a significant impact on the car industry.

“The rising cost of prime sites on major roads means car sales properties in these locations are being increasingly dominated by big brand dealers generally offering new and used cars as well as vehicle servicing,” says John Church, Bayleys Real Estate’s national director commercial. “In some instances, dealerships are now beginning to be incorporated into the lower levels of multi storeyed Mixed Use developments.”

Church says where internet purchasing is increasingly coming into play there is also a trend towards moving used car yards indoors. A current example of this is one of Japan’s biggest car dealers announcing its arrival in New Zealand by leasing most of a former furniture factory in the Wairau Valley on Auckland’s North Shore on a lease negotiated by Colin Harper, Bayleys North Shore Commercial.

In one of the largest industrial leasing transactions concluded on the North Shore this year, giant Japanese car seller Gulliver International Co Ltd has leased close to 8000 sq m of space at 217-222 Archers Rd.

The seven-year lease of the majority of the former Morgan Furniture Lazy Boy manufacturing plant on over one hectare of land encompasses 7227 sq m of ground floor warehouse space and 673 sq m of upstairs offices.

Harper says it is part of a growing trend both globally and within New Zealand for high turnover used car dealers, that undertake a lot of transacting online, to run their businesses indoors rather than through traditional open car yards.

“This means potential purchasers can view vehicles in comfort, protected from the vagaries of Auckland’s fickle weather and it reduces the amount of car washing required,” he says.

“It’s also breathing new life into older, dated industrial buildings, mostly previously used for manufacturing and which often have low studs and lots of columns that make them generally unsuited to the requirements of modern warehousing businesses.

“They can generally be leased at an attractive rental and they suit the ‘low overheads equals affordable cars’ image that vehicle importers are often wanting to portray. Many of these older, saw-toothed designed buildings also have translucent panels in their ceilings which let in lots of natural light so they work well for vehicle inspection.”

Harper, who specialises in the leasing and sale of properties in the Wairau Valley, says Gulliver is undertaking a substantial refurbishment of the Archers Rd building, including a re-lacquering of the wooden-on-concrete ground floor. Part of the complex will be used for one-stop-shop vehicle servicing with the balance used as showroom space. Other features of the building are likely to include customer service facilities like a café and possibly a children’s play area. He says one of the attractions for Gulliver is the easy access to and from the property with large car transporters able to drive around the building.

While the publicly listed Japanese company is occupying most the building, Trevor Duffin, of Bayleys North Shore Commercial has also leased over 2000 sq m of the premises for furniture storage in two separate leases.

In conjunction with a small showroom on Broadway in Newmarket, this is Gulliver’s first foray into the New Zealand market. “They are set to give the used car market in New Zealand quite a shake up because they intend to import large volumes of high quality, low mileage second hand Japanese cars into New Zealand at very competitive prices given their low cost business model,” says Harper. “They also have a number of unique selling features which gives them some major points of difference in the market.”

These include a 15 day test drive period which enables a purchaser to return the car should they change their mind within this time. All vehicles undergo a detailed inspection before leaving Japan and are also AA appraised here with the inspection reports made available to purchasers. All cars are sold with a one year warranty backed by 24 hour roadside servicing.

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Artist’s impression of new nine level building at 119 Great North Rd, Grey Lynn, which has been designed for Giltrap Group Holdings to house its luxury brands.

Gulliver was founded in 1994 and its shares have been listed on the Tokyo stock exchange since 1998. It purchases around 200,000 cars a year in Japan and sells them at around 420 locations. It established its first overseas subsidiary Gulliver USA in 2004 and entered into a joint venture in Thailand in 2013 which it is using as a stepping stone for expansion into other ASEAN countries.

Harper says Gulliver’s New Zealand operation will be selling both direct to the public and to used car dealers and will be transacting much of its business online (www.glv.co.nz) with a New Zealand wide delivery service planned..

There are also signs that the traditional new car dealership model is undergoing change globally, according to an article in Bayleys’ latest Total Property magazine. It says conventional bricks and mortar dealerships having forecourts lined with cars are likely to be replaced with digitised flagship stores in cities where land is in short supply and very expensive.  

New vehicle sales showrooms are evolving in some of the world’s big cities in response to pressures on commercial land, and in line with the changing buying expectations of customers.

In London, near Piccadilly Circus, Audi has a new urban digital car showroom format that uses state-of-the-art technology to make clever use of precious city space.  After walking in off the retail street, technology puts the customer in the driving seat. Touch screen tables enable them to configure their own Audi in realistic one-to-one scale, and to see every combination available. There is only one actual car on display at any one time.

Global research and consulting company Frost & Sullivan says a new generation of buyers will look to shop for vehicles in the same way they purchase music, clothing and the latest technological gadgets. By 2025, the company estimates one in every five new car purchases globally will be made online. It says digital showrooms and online retailing is “a big shift that is coming fast” with manufacturers increasingly looking to control direct, online sales.

In New Zealand, industrial personnel spoken to by Total Property writers do not expect digitalised showrooms to take over physical showrooms any time soon. However, multi brands are being consolidated under one roof and commercial space is being reassessed and reconfigured.

Giltrap, one of Auckland’s largest vehicle dealerships, is moving away from full occupation of some of its sites. The best example of this is a new high-profile development which is coming out of the ground at 119 Great North Road, Grey Lynn. The nine level Warren and Mahoney designed building will house dealerships for luxury brands Lamborghini, Aston Martin and Bentley at ground level; along with a separate dedicated workshop and technician facilities, two levels of car parking, and corporate office space on the upper levels. Some of this office space and associated parking is to be released to the rental market.

Luke Senior, property manager for Giltrap Group Holdings, says building ‘119’ is a standalone Mixed Use addition to the Giltrap property portfolio and, given the location and zoning, the site warrants a high quality development.

“It’s good for the business to develop Mixed Use properties. Given that we invest heavily in our buildings and can deliver a great product, we expect upmarket tenants will want to be in the same building with us,” says Senior.

 “We are building to the maximum allowable parameters under council planning guidelines for this site  – boundary to boundary and to the highest level allowable. We have determined that the best and highest use for this particular site is retail and office rather than residential apartments.

“Long-term thinking has been engaged with regards to the design so that if – further down the road – we decided to take the dealerships out, we would still have a viable, desirable retail proposition to offer to the market.”

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John Church (Left) Colin Harper (Right)