Old tip site ripe for development

12:53 PM Thursday July 24, 2014 Colin Taylor

Developers are expected to compete for the last big undeveloped business zoned site in the Barry's Pt area of Takapuna just over the Auckland Harbour Bridge.

"This property at 6 Fred Thomas Drive was once part of the Barry's Pt landfill and multiple parties have had their sights on it for 30 years," says John Jefferson, investment sales broker with Savills, who with the agency's joint managing director Paddy Callesen, is marketing it for sale by tender closing on July 3

The Auckland Council-owned 1.8 hectare bare greenfield site is now surplus to the council's requirements and has been divided into two lots of 8109sq m and 9920sq m.

"Its size, location, extensive views of the sea and city and zoning will ensure the property will be hotly contested by developers, owner-occupiers and investors, who are active in the Auckland market," Jefferson says.

The relatively flat site is ready to be developed and based on its mixed use business zoning will appeal to office and retail developers and investors. Developers or investors may want to take on some zoning risk and look at gaining consent through private plan changes, he says.

"As a capped landfill site any developer will need to assess the engineering and monitoring requirements as well. Despite these challenges, the position, profile, size and location of the site means it will command a premium that is expected when selling a greenfields site in a brownfields location."

Callesen says a substantial site is difficult to value at a straight square metreage rate for several reasons, including the block's rarity.

"A property such as this is usually valued from the road frontage to the rear of the site on a square metre basis. Using that valuation technique on a site that has almost 300 metres of road frontage and is 60 metres deep, it could carve up 'like a sausage' into smaller, higher valued blocks.

"They would be attractive to high end users that need road exposure such as car dealerships and service centres or to office park investors who could develop a similar concept to the adjoining Aon office park."

The road is named after Fred Thomas, a former North Shore mayor, and is a feeder arterial to the motorway. It was only extended to the intersection of Esmonde Rd in the past 10 years, to relieve the traffic congestion on Barry's Pt Rd.

The CBD is a 10 minute drive from Takapuna. Jefferson says strong North Shore growth trends have been evident, with resulting increased confidence in the area's future growth.

"Takapuna is being transformed into the North Shore's central business hub in line with the Auckland Council's plans for the city.

"Large projects are either under way or in the pipeline and they incorporate offices, retailing apartments and mixed-used projects. They will have positive flow-on effects for developers and investors interested in this property."

The site sits in the council's Devonport-Takapuna Local Board area which has some key Takapuna initiatives under way and is in the planning stages for the revitalisation of Hurstmere and Lake Rds.

A recent economic development report shows gross domestic product (GDP) in the Devonport-Takapuna area during 2012 totalled $3.1 billion which is 3.9 per cent of the regional economy.

The report says the area has a pattern of economic activity quite distinct from that of Auckland with IT, financial, health and professional services large sectors within the local economy.

There are more than 8000 businesses in the Devonport-Takapuna area and more than 27,000 employees.

Employment in the community board area increased by an average of 0.7 per cent a year from 2002 to 2012 and it has relatively high numbers of jobs in knowledge-intensive industries.

These industries comprised 53 per cent of employment in Takapuna-Devonport, significantly higher than in Auckland which had 36 per cent of jobs in knowledge intensive industries. The information and communications technology (ICT) sector has a strong foothold in the area and biotechnology is also relatively robust.

The value of the office investment market across the Auckland region is between $7 billion and $8 billion. The North Shore contains 400,000sq m of office property providing lower cost alternatives to the CBD.

Enterprise North Shore estimates that 117,000 people are expected to be working on the North Shore by 2031, almost one-third higher than now.

In recent years business parks adjacent to the northern motorways, including the Akoranga Business Park and Smales Farm, have opened to provide office space for a variety of substantial and smaller commercial businesses.

Jefferson says Takapuna is regarded as a premium office area on the North Shore because of the quality of its buildings and tenant profiles.

"The office sector is providing capital returns not seen since the global financial crisis started and this property makes for a desirable investment opportunity with massive street exposure."

He says buyers interested in establishing an office precinct should be buoyed by the latest figures showing a third consecutive year of reducing vacancy rates in the sector.

"There are large and small tenants wanting to own their own premises or lease and move to a property that is more in tune with their business and culture."

Savills expects to attract interest to the property from investors, developers and owner-occupiers.

"There is a lot of confidence in the economy and this is pushing through to the commercial property market," says Callesen.

"We have noticed a marked increase in activity since the beginning of the year in all sectors of the market driven by the opportunities available through large blocks of bare land, well presented office and industrial buildings with robust tenant inquiry and an upsurge in consumer spending in the retail sector.

"A sustained low interest rate environment and an increasing population driven by migration is driving business growth, expansion and profitability and bringing opportunities to the market that haven't been there for the past four to five years."

Jefferson says as the bare land is developed, employment opportunities will increase. At the same time, improved motorway connections under construction will fully link the North Shore with West Auckland making it easier for commuters.