McDougall Reidy and the chocolate factory

Cadbury's 5ha Rosebank Rd site will be transformed into sophisticated industrial warehouses. Photo / Suppplied

Cadbury's chocolate factory on a 5ha site in Rosebank Rd, Avondale is being transformed into an industrial park by Auckland property company McDougall Reidy.

The site was recently bought for $285 per square metre by McDougall Reidy in a joint venture with Wellington-based Willis Bond Capital Partners.

The property will be transformed from ugly manufacturing buildings into sophisticated industrial warehouses over the next two to three years.

During the Cadbury site redevelopment, some buildings will be leased and the rest will be demolished and developed into industrial sites for sale or lease by expressions of interest through CB Richard Ellis's national director Pierce Corbett.

CBRE South Auckland managing director Paddy Callesen negotiated the sale of the property with colleague Derek Harries. It has been Cadbury New Zealand's head office, manufacturing and distribution centre for more than 20 years. Griffin's owned the site for 20 years before that but Cadbury took it over when the chocolate maker acquired Griffin's confectionery business.

Cadbury stopped manufacturing at the Avondale site in 2009 and consolidated its manufacturing in Dunedin and Australia, spending $69 million upgrading its Dunedin factory. Greg Reidy, McDougall Reidy's managing director, says the Cadbury site is one of only a few large industrial holdings in a good West Auckland location available for redevelopment.

"The economies of scale and quality of Cadbury's buildings are typical of a reputable company that knows its business."

Wayne Silver, director of Willis Bond Capital Partners, says one of the attractive features of the investment is the enormous range of potential occupiers that could be accommodated on the site, from a single 20,000sq m industrial manufacturer or distributor down to smaller trade-based suppliers.

"This flexibility inherent in the site and zoning is an important de-risking mechanism," Silver says.

Corbett says Cadbury's buildings cover only 42 per cent of the site.

"Maximum site coverage for industrial properties within Auckland is usually about 50 per cent and allowing that level of development on the Cadbury site still leaves more than 13,000sq m for vehicle circulation, parking, truck access and yards."

About 10,000sq m of 1960s constructed low stud, saw-toothed factory buildings will be demolished.

In their place on 3.3ha of flat, regular shaped land, with a wide frontage to Rosebank Rd, will be sites that can carry warehouses and distribution centres varying in size from 4000sq m to 20,000sq m.

"This project is starting from scratch and we are expecting a lot of interest," says Corbett. "There is high demand from owner-occupiers wanting to secure their own property on Rosebank Rd and also from tenants. The joint venture will work with owner-occupiers and tenants to understand their requirements and design and build properties to suit."

Callesen says good warehouse space on Rosebank Rd is in short supply because of its proximity to the city and the new Western Ring Route that will connect the peninsula with the airport. "It gives a direct route from the CBD to the airport and will drive an expected increase in value of industrial property on Rosebank Rd and the peninsula."

Cadbury will retain its links to the site as a tenant.

The joint venture partners bought the site with two pre-committed tenants - Cadbury and Vernon Carriers.

As part of the sale, the joint venture partners agreed to build Cadbury a new $6.5 million 1500sq m, four-star green, two-level head office to accommodate 80 staff on the existing carpark.

McDougall Reidy is working with Woodhams Meikle Zhan and Haydn & Rollett Construction on the design and expects to start construction by the end of this year and have it finished by November next year. Cadbury is staying in its existing office on site until the building is completed.

Vernon Carriers has leased Cadbury's former 4300sq m distribution centre at the rear of the site for 12 years. The logistics company is amalgamating into one warehouse from two sites on Rosebank Rd.

Corbett says Cadbury spared no expense constructing its buildings on the site and the 1989 warehouse leased by Vernon was fully insulated.

Another 5300sq m of existing buildings will be retained and leased, including the company's existing office building and another 3500sq m distribution centre/warehouse.

"Tenants for these buildings are yet to be identified," says Corbett.

The property is zoned Business 5 under the Auckland Council District Plan and this allows for light industrial and offices.