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St Laurence Property & Finance, and two private joint venture partners, John Abel-Pattinson and Kevin Cox, owners of Greenstone Group, are selling 8ha of Mt Wellington land on which a $300 million retail, office, health and lifestyle development is being built.
Development of Lunn Ave - in the centre of the Auckland isthmus that overlooks the huge Stonefields residential development - has been started, but the joint venture is being dissolved and the partnership wants to extract the value from its work in establishing a masterplan and obtaining consents.
The development, dubbed LA Central after the initials of Lunn Ave, includes five separate sites: two blocks of vacant land, a fresh food precinct, 1.5ha leased to Waste Management, and 2.5ha earmarked for a Mitre 10 Mega store and possible home DIY precinct. The owners decided to put the entire land holding on the market through Colliers International.
The property is being sold in five separate parcels that can be bought individually or together by private treaty with offers closing on April 8.
"Another developer or developers can carry on the development, particularly as the cost of doing business and holding assets is coming down," says Phil Eaton, a director of consultancy firm Greenstone Group.
Since buying the land for LA Central over five years, the joint venture has obtained resource consent for more than 60,000sq m of buildings and its developments have already gentrified a shabby industrial area.
Peter Herdson, sales director for Colliers International, said: "What has been proposed by the joint venture meets the expectations of the market. It needed to be turned into a destination to banish its working class origins.
"The built and operating precincts will be attractive investments in this market because they have existing cash flows, while the development land can be land banked or used by owner occupiers. Lunn Ave has more than 20,000 vehicles passing through a day, presenting a high-profile opportunity for retail and corporate offices seeking a new location. It could eventually be linked to the nearby railway through improved bus services."
Herdson and corporate sales brokers John Green and Frida Andersson say the 1ha fresh food precinct is likely to be a highly sought-after investment.
Sitting on three titles, the precinct contains 200 carparks, DB's Flying Moa pub and 17 other tenancies, including takeaway shops and restaurants from some of Auckland's best-known brands. "It has proved a winner by changing the face of Lunn Ave and the shops have been successful from the day they opened," says Eaton.
"All the stores have good road frontage so their signage stands out."
There are two vacant outlets and Eaton expects them to be leased shortly.
Waste Management's lease of 1.2ha of land generating close to $600,000 a year in rent is also an investment that will create a lot of interest from buyers, says Herdson.
Eaton says under the Auckland City Council's zoning of the property, it is under-utilised as Waste Management mainly uses it as a yard and the company has only a small office building.
"As the area develops and intensifies, land costs are going to increase for Waste Management's yard. While the company has rights of renewal in its lease, there are various break clauses allowing it to move out."
Herdson says Mitre 10 Mega's new 10,000sq m store is another plum investment. The mega warehouse will sit on part of a vacant 2.5ha site and anchor a possible DIY home precinct. The company signed an unconditional lease and was granted resource consent, but Eaton says a minor appeal has been filed and it will be heard by the Environment Court on March 2.
The two blocks of vacant land - 3ha on the corner of Lunn Ave and Ngahue Rd and 1.2ha on the corner of Abbotts Way and Lunn Ave - are ripe for medium-term development, says Herdson.
The 3ha site has resource consent for more than 50,000sq m of office space over seven low-rise buildings on top of a podium, built so it can accommodate 1500 cars. The consented buildings range from 6000sq m to nearly 9000sq m with floorplates from 1500sq m to 2200sq m.
Eaton says leasing started in the middle of last year. "We were offering competitive rents, quality offices and a higher amenity." The land has three titles and Eaton says there is the potential to realign the boundaries if required.
There is no resource consent for the 1.2ha block on the other side of the road, but the joint venture was looking at options for a health and lifestyle precinct that could include a gym, crèche, medical centres, physiotherapist, optometrist and other professionals.
"Other options are showroom and retail premises, or even an owner-occupied service station," Eaton says. "There are plenty of businesses wanting showroom facilities on Lunn Ave, but there's few opportunities anywhere in the area."
The joint venture has spent a lot of time and money investing in a long-term strategy for the sites and "the Auckland City and Regional Councils will be disappointed the strategy is unlikely to go ahead", says Eaton.
The sites for sale are all zoned Business under the Auckland City Council's District Plan and can be developed fairly intensively. "A lot of the focus around development of this land has been working out its highest and best use," says Eaton.
He believes the five to seven-year development schedule the joint venture had set itself it still achievable, even though the credit crunch has had an impact on New Zealand's economy. "We are far better off than most countries. Development of Lunn Ave is now reality, not perception. It's taken a long time for the area's potential to be realised, but it has now got momentum."
Collier's broker John Green says rising residential numbers and increased amenities, including a sports facility, a retirement village and expanding postgraduate facilities for University of Auckland students at the Tamaki campus will enhance demand for space at LA Central.
The entire development of Lunn Ave on both sides will cover 11ha. On the western edge of Lunn Ave, off Abbotts Way, Ryman Healthcare has developed the Sir Edmund Hillary Retirement Village. Elsewhere, Lunn Ave's industrial image is being transformed by the establishment of wholesale, trade and convenience retail outlets.
Lunn Ave used to epitomise working-class Mt Wellington - poor houses at one end and dirty, extractive industries and rundown factories at the other.
Dedicated in 1921 by the Remuera & Panmure Land Co, and named after book publisher Alfred Lunn, who played an important role in the social and professional life of the city, the avenue was soon headquarters to quarrier Wilson & Rothery.
From 1936 it was also home to Winstone's new quarry, serving as a replacement for its diminishing Auckland city prospects and for the next 65 years it provided basalt rock for Auckland's burgeoning infrastructure.
Most houses were built after World War II and industry developed untidily in the years that followed. Its central position and closeness to a huge labour market and the University of Auckland's Tamaki campus were never fully realised.
A generation ago there seemed little prospect that Lunn Ave would become a retail centre and potential business campus.
That changed in 2001 when developer Landco acquired the Lunn Ave quarry edge and quarry from Winstone Aggregates, by then part of Fletcher Building. It was the touchstone for massive suburban renewal projects encompassing the Lunn Ave, Ngahue Rd quarry edge and the quarry itself.
The unsightly rocky quarry wasteland has become Stonefields - an integrated community in the centre of Auckland that will include parks, wetlands, heritage trails, walkways, a primary school and town centre (or town "quarter" as it is to be called). It will eventually have 2900 homes housing more than 6500 people - bigger than the average New Zealand country town.
Part of the land where Stonefields is being built once belonged to a world-class horse stud, Wellington Park. At its height it ran 50 broodmares and pedigree short-horn cattle and sheep on nearly 250ha.
Fletcher Living is the leading player in the quarry site itself, building villas of various sizes on a 350-370sq m site and terrace houses on 200sq m sites.
Fletcher Living says the feedback has been positive on price and quality.
"Stonefields is on the fringe of Remuera and it is quite a central location for people who work in the south and city," says Green. "It is one of the last sites that has not been developed on the isthmus.
"Looking around Auckland there would be few sites like it."
The masterplan for the development provides for what is described as a "diverse mix of housing and ownership" - from standalone villas to high-density apartments.
Green says the just-started development of Lunn Ave and Stonefields has already had the effect of gentrifying a scruffy industrial area and integrating the precinct with nearby parks, such as the Remuera Golf Course and the Waiatarua wetlands.
"It is being seen as the catalyst for the revitalisation of Panmure as well," says Green.
