From quarrying to commerce

Property developer Greenstone Group and property investment company St Laurence Property & Finance are launching their first joint-venture commercial development, The Quarry on Lunn, at the former Mt Wellington Quarry.

The level, compacted development area is Auckland's largest remaining brownfield site, covering five titles of around 3000sq m to 3600sq m, each stretching 500m along Lunn Ave.

It has sweeping views over the quarry lake and Mt Wellington to the Tamaki Estuary for prospective office, showroom and retail tenants.

Colliers International is taking the development to the market on two bases - the sale of the leasehold interest in each site and expressions of interest from prospective tenants for design/build developments.

Greenstone Group and St Laurence bought the property from Landco nearly three years ago.

Construction of The Quarry on Lunn complex is expected to start in the middle of next year and it is scheduled to open in late 2007.

Located near the intersection of Lunn Ave, College Rd and Abbots Way, one of the biggest junctions in the east, The Quarry on Lunn will service new quarry housing subdivision and older suburbs now under-serviced by retailers.

Landco's master plan for the quarry development includes 2200 to 2500 houses, keeping a lake to support the Waiatarua wetland, moving the 1.2ha commercial complex from the quarry centre closer to the new Auckland Netball Centre courts and headquarters at Ngahue Reserve.

The roads carry 20,000 vehicles a day, giving tenants a high profile to an emerging new suburb requiring high-quality services.

The development will eventually service up to 2500 new homes and about 7000 people at the quarry - more than a quarter of Tamaki's projected population growth of 30,000 people by 2015. There are also more than 30,000 houses in affluent suburbs to the north and Panmure and Mt Wellington to the south.

Sales brokers Peter Herdson and John Green say terms of perpetual lease have the unusual attraction of a generous two-year rent-free period. Greenstone Group is minimising front-end costs to attract good developers, says Herdson.

He expects market interest in the leasehold sites to be about 60 per cent to 70 per cent of the underlying freehold value. Ground rents will be reviewed every seven years.

Architects at Ignite have drawn up a range of concept plans for each site and the venture's partners are flexible about tenancies' size and site.

Colliers retail director Ash Hira expects national and local office, showroom, medical, childcare, speciality and bulk retail and food and fast food tenants to line up for the development.

The height limit under the Business 4 zoning allows for structures of up to 15m, giving opportunities for mixed-used developments, such as retail on the ground level and offices above, says Hira. The newly filled sites could also be excavated to create underground parking levels.

The adjoining Glen Innes and Panmure suburbs have been designated by the Auckland Regional Council as growth nodes that can support a higher housing density.

Herdson says the leasehold sites will appeal to developers across the board, although they will have to conform to specified quality controls. The ground lease requires the joint-venture's approval for any development and that includes architecture, presentation and landscaping.

Leasehold is a form of land tenure that has a history in the eastern suburbs. In the past church trusts owned more than 7000 residential ground leases, until they diversified into commercial ground leases.

Many commercial properties of similar zoning in the region are on leasehold titles. Green says leasehold property gives investors cheaper access to prime property.

The Quarry on Lunn will bring a variety of retailers to the eastern suburbs that have suffered from a dearth of land zoned to provide these services, says Green.

Across the road Placemakers has opened a new 8000sq m store and it is rumoured a supermarket will be built nearby. The Melanesian Trust Board originally owned the Placemakers site and sold it to Landco, which developed the site and sold it back to Trust Investments.

The investment group also owns the Waste Management property.

"Developments in the area have already produced strong increases in land prices," says St Laurence chief executive John Mallon.

Landco bought the quarry (105ha at the time) from quarry operator Winstone's owners, Fletcher Challenge and Brierley Investments, for $38 million in 2001.

The Fletcher-Brierley joint venture spent four years on a development project for the quarry before the Auckland City Council refused its bid for a private zone change.

The council says the quarry is surrounded by Auckland University's Tamaki campus, Glen Innes and Panmure townships - important infrastructure key to managing the city's growth in the next 25 years.

The council and Landco are looking at a new road linking College Rd with Pilkington Rd to provide a connection from the quarry and netball site to the Tamaki railway station.