KEY POINTS:
Business land uptake has continued unabated in two of the region's major industrial centres, Manukau City and North Shore City, according to surveys recently conducted by Manukau City Council and Bayleys Research.
The survey of industrial land uptake by Manukau City Council revealed that a further 70 hectares of vacant industrially zoned land was absorbed for development during the year to February 2007, reducing the supply of available land to approximately 690 ha.
In its latest overview of the Auckland industrial market, Bayleys Research says this is the fifth consecutive year absorption has topped 50 ha with the average uptake over that period being about 68 ha.
At this rate of take-up remaining industrial land supplies in Manukau City will be exhausted in less than 11 years, says Ian Little, Bayleys Research senior analyst.
On the North Shore, the uptake of business-zoned land in North Harbour Industrial Estate, Mairangi Bay and Rosedale Industrial Estate, totalled 10.23 ha in the year to the end of February, reducing the total available land to about 40 ha. Average uptake over the past six years has been 15.87 ha.
Little says the lower uptake of land on the North Shore simply reflects that the small amount of undeveloped land that does remain, is tightly held and what is on the market is very expensive, with asking prices in Albany now as high as $700 per square metre compared with $250 to $300 per sq m three years ago.
The diminishing supply has resulted in values soaring throughout the region. Waitakere and Auckland City precincts have had land price growth of approximately 80 per cent over the past three years and this has been eclipsed in Albany and Manukau where growth exceeded 100 per cent.
Bayleys Research says the continued pressure on existing land supply is exemplified by activity at the Highbrook Business Park where uptake is reportedly running around five years ahead of schedule. Owners Highbrook Developments had initially envisaged leasing and developing land in the southern peninsula area during the first six years of the project before bringing land in the northern peninsula on line. But demand has been such that the northern peninsula is being brought on line in the third year.
Little says the continued squeeze on land supply has put pressure on regional government to release more land for business use.
Auckland Regional Council has produced the Auckland Region Business Land Strategy which identifies 575.8 ha of business-zoned land likely to become available for development in the medium term future.
It was assumed that, based on average uptake of 129 ha of land per annum, this additional area - along with existing available land - would meet the region's requirements through to 2020.
"However, the estimate of 129 hectares per annum is likely to be conservative and therefore land supply could be exhausted earlier than initially envisaged," Little says.
Auckland's city and district councils are also taking steps to provide additional greenfield sites either by rezoning land or putting proposals to the ARC to extend the Metropolitan Urban Limit.
Areas where such changes are mooted have over recent years attracted increasing interest from speculators, who have been compiling land banks in anticipation of zoning changes, says Bayleys Manukau principal Chris Bayley. This has resulted in sharp increases in value for this type of land as well.
To the north of Auckland International Airport, Manukau City Council has proposed a plan change which will rezone rural land to Business 5.
Bayley says the effect on land values in the area has been marked, not only for land directly affected by the zone change, but also adjacent land. "By way of example, an 8.9 ha block of rural land proposed to remain rurally zoned at this stage - but that could potentially be rezoned business at some stage in the future - sold in July 2004 for $780,000 and again in August 2006 for $3,590,000, an increase of 360 per cent. Another parcel of land on Oruarangi Rd, again outside the proposed Business zoning, has recently sold at a price equating to approximately $120 per sq m."
Bayley says other areas in the Papakura and Franklin districts and as far afield as Waiuku have also been part of the land grab, as these regions are likely to see significant future business development as land in Manukau City dries up or becomes too expensive for many businesses.
"With land values in prime industrial areas such as East Tamaki now as high as $450-$550 a square metre it's making it hard for developers to make a basic warehouse complex stack up.
"Industrial or service-related business that can't afford to pay to pay a premium rent are therefore having to look south and the landbankers are following them."
Papakura is an area that is attracting attention from land bankers because of its future growth potential. Bayleys has a 36 ha block of land in Walker Rd, Opaheke, opposite the Hunua industrial estate, Papakura's main industrial area, up for tender in its latest Total Property portfolio.
Shane Snijder, of Bayleys Manukau who is marketing the property with Rex Gazzard of Bayleys Papakura, says it is rare for a significant land holding such as this, which borders an industrial estate, to become available for purchase.
He says the rural zoned property is used to grow maize and run horses and comes with an attractive two-year-old house, horse stables and an implement shed. It is being offered for sale in two lots, of just over 15 and 20 ha each, with tenders closing on June 20.
Snijder says the property is attracting good interest and is expected to sell for in excess of $30 a square metre.
- www.bayleys, co.nz/research
