New council needs to tackle land shortage

Photo / Brett Phibbs.

A shortage of suitably zoned land has been one of the biggest issues for the industrial property market in the Auckland area under the existing multi-tiered city council and Auckland Regional Council (ARC) structure.

This shortage has been exacerbated by the reluctance of the ARC to extend the Metropolitan Urban Limit (MUL) to open up new greenfields areas for business and industrial development particularly in South Auckland.

"While the ARC had good intentions in terms of endeavouring to contain Auckland's urban sprawl, its policy of encouraging more intensive brownfields development in centralised areas with good access to public transport didn't work well," says Chris Bayley, who now heads commercial and industrial operations for Bayleys Real Estate.

"This means there is now very little land left on which businesses can have premises constructed to suit their requirements and to cater for their future growth.

"An imbalance between demand and supply has pushed up the price of land in popular industrial areas to the point where it is no longer affordable for a number of businesses with basic warehousing or factory requirements. Companies have to head north to areas such as Silverdale, Warkworth and even Northland - or search for land south of Auckland."

Bayley says the prolonged economic downturn has taken some of the pressure off in the short-term resulting in little demand for business and industrial land over the past two years which caused prices to fall substantially. However, once the economic recovery gathers momentum and demand picks up, the shortage of land will quickly become an issue again.

"In the view of Bayleys Real Estate, unless the new Super City council addresses this and provides more growth areas for businesses, particularly those requiring industrial land, then there is a danger the next industrial suburb of Auckland might end up being Hamilton which has good quality affordable land and much improved road access from Auckland."

Bayley points out the Auckland region's population growth is also forecast to continue to charge ahead and additional people need additional jobs.

"Businesses create jobs and they need an adequate, affordable supply of land from which to operate"

Bayley says it is hoped a new Super City structure will also remove the inconsistencies and differences of approaches between various city councils in areas such as development levies and reserve contributions as well as interpretations of the Resource Management Act.

"The comment we get time and time again from clients is that the development consent process has become very complicated and convoluted and it takes a long time to get anything approved. They will no doubt be hoping this will improve under the Super City structure."

This view is echoed by Charles Cooper, national director, metro and industrial for Colliers, who points out that only 4.8ha of industrial land was taken up in Manukau City last year. The average over the previous five years was over 50ha per annum.

"While there is over 600ha of developable land in the established industrial areas in the region currently, there is a huge imbalance. North Shore City for example has less than 20ha available, and not a single site bigger than 1ha. At the same time, over 500ha, some of which has industrial development potential, has been brought inside the MUL in Massey and Hobsonville, this year.

"This imbalance gives rise to the possibility of a major manufacturer seeking a large site, maybe creating 200 jobs, but being unable to find a large enough site in the best location, with a skilled workforce, suitable motorway access, adequate power and water and so on. A single council would be more easily able to recognise the economic benefit to the region and make any adjustments to surrounding zonings than any of the previous city councils."

Zoltan Morizc, senior director, CB Richard Ellis research and consulting, says a contributing factor to the shortage of industrial and business land are the spatial plans of councils and the ARC, which have "tended to be based on theory and ideology without sufficient attention being paid to market realities".

However in order to achieve their land-use outcomes, local bodies are heavily reliant on the private sector and the commercial property market to undertake developments and shape land use.

"The Super City concept provides the opportunity for greater partnership with the private sector and we are hopeful the new council will have a greater understanding of market and economic issues when developing its spatial plan than has been the case to date," Morizc says. "It will be only through such an understanding that an effective strategic spatial plan will be created, one that can actually be delivered on the ground to the future benefit of the city."

* From the New Zealand Herald feature, 'Project Auckland - our city'