Big is good - especially when it's new

New warehouses such as these in the Auckland Airport precinct offer great storage capacity, excellent truck access and large canopies. Photo / Supplied

Space-conscious businesses moving to new industrial parks near Auckland Airport at Mangere are helping the area to prosper despite a general commercial property downturn, according to CB Richard Ellis.

"We are experiencing high demand from businesses located in the traditional industrial areas of Auckland which want to relocate to sites within the airport precinct," says Scott Soroka, director of industrial service and logistics for CBRE.

"Mangere has become a popular destination for companies which want modern premises offering a better work environment along with more bang for their buck by cutting down their use of inefficient space.

"We have found the current economic climate, in many cases, has been the catalyst for relocation as businesses seek to maximise cost-efficiency.

"The airport precinct offers these businesses multiple solutions within buildings that are more suited to their requirements and at a more cost-effective price."

CBRE's research shows that the Airport Oaks industrial area has been one of the most active over the past decade, with more than 200,000sq m of industrial space completed since 2000.

About 50 businesses have been assisted by CBRE to relocate to the airport precinct in recent times.

"During the past 12 months in particular, we have seen businesses located in the traditional industrial areas make the move to the vicinity of the airport," Soroka says.

"This includes makers and distributors of well-known brands such as adidas, Bendon, Husqvarna, Kawasaki, and Rinnai, who have moved their existing warehousing and distribution centres to capitalise on the price advantages the airport industrial area has to offer."

According to Soroka, the "new build" warehouses that characterise the airport area are more cost-effective because of their modern designs, which focus on increasing cubic capacity and minimising logistical difficulties.

"Gone are the days where warehouse requirements were simply discussed and assessed on a square metre basis. It is now the cost per pallet."

Historically, conventional warehouses in industrial areas could accommodate an inventory of up to six pallets high. However, CBRE is marketing several high-stud properties that can accommodate inventory up to eight pallets high.

"Our clients are finding the cost of storing a pallet of goods in these new-design 'sheds' to be significantly cheaper," says Soroka.

He cites a new 9212sq m warehouse with 1545sq m canopy and a 500sq m office facility at 27-33 Pavilion Drive, Mangere, that serves as the new national headquarters for Profreight International.

The company has a head lease on the property and Soroka is exclusively marketing space available for lease on behalf of Profreight.

"The Pavilion Drive warehouse is about 12m in height and is one of those than can rack up to eight pallets high," Soroka says.

"This additional height can increase the storage capacity of the warehouse by up to 50 per cent, yet the rental rates may only be 10 to 20 per cent higher. The net effect of this is that the cost-per-pallet position is approximately 30 per cent cheaper."

Modern warehouse design has also seen a tendency towards larger yard areas offering better truck access, with some properties including truck "drive-through" capabilities. Large canopies for all-weather loading and unloading are also a feature.

Because of these efficiencies, a noticeable trend has developed for businesses to contract out their warehousing and distribution requirements - now known as "third party logistics" (3PL).

Soroka believes this is another factor behind the rapid development of the airport precinct.

"As the concept of 3PL warehousing has developed, so too have the designs of the 'shed'," he says.

"Companies are now making smarter use of their warehouse space and facilities ... Several firms are now offering space to lease in their warehouses where facilities can be shared, like office staff and forklifts.

"This reduces the operating costs for the warehouse owner or building tenant, and also for the companies which effectively sub-lease the spare space."

Many companies no longer need to own their own warehouse, says Gary Sayles, director of Profreight, a 3PL specialist that offers its customers a "virtual warehouse".

"Clients are no longer willing to pay for warehouse space they are not fully utilising on a weekly basis," says Sayles.

"We believe 3PL operations are the way of the future.

Our clients pay only for the space they need, the labour required and the transport required to process and deliver orders to their market.

"Floor space is too valuable and high-stud, purpose-build facilities mean we can provide storage solutions at a cost substantially lower than owner-operators."

Sayles says the reality of 3PL means clients no longer have to invest in future-proofing growth or employing staff based on peak periods.

Businesses also no longer need to invest in expensive equipment or facilities to unload containers and trucks.

"Profreight is what we describe as a 'one-stop shop' because the nature of our operation means that we are able to care of everything, including providing EDI [electronic data interchange] links and online reports.

"Our clients have 24/7 access to their stock, order and despatch details. That's why we market our service as a virtual warehouse."

Soroka points out that land in the airport precinct is cheaper on average to lease than in more central industrial suburbs and this is reflected in cheaper rents.

Roading improvements have also increased the attraction of the Mangere area.

"In the past the airport was perceived as an undesirable area for warehousing because of its distance to the Auckland CBD, but recent developments to the roading infrastructure have changed this," says Soroka.

"The airport precinct is more accessible and further plans are in place to improve accessibility."

He points out that Minister of Transport, Steven Joyce, recently stated that the completion of Auckland's Western Ring Route, now under construction, was "of national significance".

The completed route will comprise a single 48km motorway running north to south, providing an alternative to State Highway One, bypassing Auckland city to the west and linking Manukau, Auckland, Waitakere and North Shore cities.

As land zoned for commercial and industrial development within Manukau City becomes increasingly scarce, Auckland International Airport has the major advantage of owning large tracts of land with a zoning that allows a range of uses.

The airport itself has become a "mini-town" in recent times, housing a Foodtown supermarket, The Warehouse, doctors' surgeries, a pharmacy, a hairdresser, a Kiwibank/Post Shop, cafes, a stationery outlet, a florist, Postie Plus, Vodafone, National Bank and several ATMs.

Recreational facilities include a driving range, an 18-hole golf course and a gymnasium.

The precinct also has attractive coastal walkways, which Soroka believes will be another drawcard for tenants looking to relocate to desirable surroundings.

Security in the precinct is a major advantage for potential tenants, with a 24-hour manned police station on-airport.

The area is also guarded by numerous security cameras and 24-hour patrols, along with on-site paramedics and a full industrial fire brigade.

Soroka says he has a number of properties available to lease in the precinct, including a vacant 4380sq m warehouse/office complex in Percival Gull Place and a 1000sq m block of warehouse/office units at 113 Pavilion Drive.

Details of the warehouses can be obtained from the South Auckland branch of CBRE in Pacific Rise Highway, Mt Wellington.