KEY POINTS:
Recession and the global credit crunch are not stopping Fletcher Building from pouring more than 1 million cubic metres of fill into its disused North Wiri quarry to create nearly 40ha of industrial land.
The redeveloped quarry, between Roscommon Rd and Wiri Station Rd, is the biggest block of South Auckland freehold industrial land to come on to the open market in years.
It is expected to be sold progressively in 5ha to 20ha lots.
Colliers International has launched an expressions of interest campaign for the property that will close on December 11.
Industrial director Charles Cooper, who is marketing the quarry redevelopment sites with colleagues Greg Goldfinch, Nigel Ingham and Todd Kuzmich, claims there are no 10ha-plus freehold industrial sites currently for sale in South Auckland.
"It is a once in 50-year opportunity for owner-occupiers to buy large sites that have an underlying zone for heavy industrial use.
"We are expecting a huge amount of interest from the feedback we have had. This will do for Wiri what Highbrook has done for East Tamaki."
The redevelopment is part of Fletcher Building's "quarry end use" programme that contributed $42 million to the company's results this year.
Fletcher Building's infrastructure division chief executive Mark Binns says the firm worked for 11 years on a land swap to make the project possible.
It involved exchanging the land, minerals and cultural value of a Downer Mining property Fletcher bought when the company went bust in the 1987 sharemarket crash, for the government-owned quarry used by New Zealand Railways since the middle of the last century to provide ballast for rail tracks.
Fletcher took over the head lease of the quarry after it was no longer needed by New Zealand Railways and subleased it to Milburn for several years until it came to the end of its life.
"The Downer land had cultural significance for Maori and the future of the quarry was uncertain until we facilitated the swap," says Binns. "Nobody else was going to invest in the quarry with the certainty we have been able to bring. The Government is happy and we are happy."
Although several developers and investors have retreated from buying vacant land as the country grinds its way through the global economic woes, Binns is confident the developed site will sell.
"It wasn't an overnight decision and there is real value in it."
Fletcher Building's move to develop the quarry has come off the back of the substantial in-house planning expertise it has built up in quarry redevelopment over the past few years.
"We are being smarter with our assets and using the land more effectively. Quarrying is a capital-intensive business and the key is making sure the land is used as effectively as possible during its productive phase and after the last piece of rock has been blasted. It's a whole of life approach to these assets," says Binns.
He says the Wiri North Quarry project has been driven off the interest the company has had from big users, particularly owner-occupiers.
"We are unlocking land with a zoning that allows heavy industrial businesses. Zoned industrial land of this magnitude that can be bought on the open market in big blocks doesn't exist in Auckland. You only get one shot at this sort of development in any environment."
The release of such a big block ready to build on within the next 1 1/2 to two years is exciting for the sector.
Goldfinch says there are only about 12 sites zoned industrial of 15ha or greater from Silverdale to Bombay.
Colliers International's latest research shows the once reliable abundance of vacant South Auckland industrial land will be exhausted before it was predicted to do so.
The Manukau City Council's Business Space Survey shows there are only 411ha of undeveloped industrial land within the city, a drop of 286ha in a year. Of the land classified as vacant and available for development, 264ha are on partially developed properties. The remaining 147ha are mainly in small lots.
Darren Park, Colliers International research analyst, says to make matters worse, local land consultants have identified up to 50ha of land in the "undeveloped" category that either lack services or are part of the SouthWestern Motorway and not available for industrial or commercial use.
Cooper says a combination of a dearth of industrial-zoned land for sale on the North Shore and within Auckland City's boundaries, and companies rationalising their fixed costs to enhance profitability, are drawing businesses to South Auckland.
"The development of distribution and freight centres at Wiri in the past few years has seen the area leap ahead as a preferred industrial location. This has been buoyed by the easy access to the airport and a network of major roads."
Goldfinch says the gently sloping to almost flat site has many features that make it attractive. "It has the main trunk railway line running down the eastern boundary and the $19 million Ports of Auckland inland port adjacent. The establishment of the inland port has given businesses the ability to manage containers more efficiently."
Ports of Auckland and Ontrack are preparing to upgrade the inland port's rail sidings and build an adjacent hardstand to be able to move more freight by rail to and from Auckland's downtown seaport. The Government will invest $6 million in the project.
Scheduled to be finished by the end of next year, the upgraded rail shuttle service will eliminate 100,000 truck trips a year on the the 25km cross-city road haul between Wiri and the CBD.
Goldfinch says it could be possible to put a similar siding on to the quarry land. "As fuel costs rise access to rail will be of long-term strategic value."
Cooper says the property is within 200m of the new SH20 motorway interchange and eight to 10 minutes to Auckland International airport.
Fletcher Building will be busy with its quarry business over the next few years. It owns 26 quarries throughout New Zealand, some in joint ventures, and many are coming to the end of their productive lives.
The infrastructure division is working on a masterplan with the Auckland City Council and residents' groups to develop the 15ha suburban Three Kings Quarry site in central Auckland.
It did the same with the Mt Wellington quarry, which is now being turned into a community for 6500 people.
"In that situation we decided it was more prudent to sell the quarry, commit to buying back the majority of the residential sections once the zoning and redevelopment was completed," Cooper says. "Every situation will have different dynamics. What we have recognised is the company can obtain an earnings stream from more intensive land use of our quarries."
