Apartments likely for historic spaces
Hundreds of hectares of Auckland industrial land have been rezoned as Mixed Use (residential), in an effort to help to solve the city’s housing shortage — but there’s a downside.
Under the new Unitary Plan, entire suburbs of Great Auckland previously restricted to the likes of warehouses, factories and workshops will now attract more lucrative apartment development.
Barfoot and Thompson commercial agent Mike Jensen fears that an over-use of this zone will skew the balance between accommodation and employment needs. He argues that doing away with longstanding pockets of the city dedicated to industrial purposes will force Aucklanders to commute further to both work and access various services.
“All around the world, balanced city planning allows for pockets of industrial areas interspersed with residential areas,” Jensen says.
“But Auckland Council has now effectively incentivised more intensive forms of land use at the expense of industry — several apartment blocks can be built on a site which once housed a single factorywarehouse.
“Apartments go upwards and therefore are likely to be adequately catered for, but industrial buildings take up larger chunks of land, not only for the premises themselves but also for the surrounding yard space needed for truck manoeuvring and storage.”
As an example, Jensen points to the ex-army buildings on Pilkington Rd, Panmure, which was recently sold to Goodman, as an example of this trend.
Still referred to by locals as “Camp Bunn”, this suburb traces its history back to the 1940s, when the US Army built warehouses there to support the Pacific war effort. The long military sheds, which were erected in haste using native timbers, still survive.
“The area accommodates hundreds of industrial warehouses and businesses that service the inner city. But now that it has been re-zoned, the owners are working with council to redevelop it to highest and best use — residential.”
Jensen believes this will occur within five to seven years.
A sympathetic council is working with owners to ensure this happens as quickly as possible, to assist in alleviating the housing shortage.
“As a result, the mainly industrial tenants who occupy these buildings are been offered a maximum lease term of only five years. They may be allowed to stay longer but if so will then have a 12-month demolition clause added to their leases, which eliminates the benefits of any right-ofrenewal if they have one. So, effectively, the tenants have only a five-year lease term, and then they could be asked to leave.”
Jensen says this is forcing tenants who wish to stay in the area, and who can afford it, to buy property to secure their future in Auckland’s inner city.
“Of course, this must be done instead of investing in their businesses,” he adds.
“Consequently this is also pushing prices in this area to record levels and also means record rentals as the shortage of industrial land continues to grow.”
Jensen now sees smaller industrial units in the area selling for as high as $5000p/sq m and rental levels of $165p/sq m . For the most part, tenants who now occupy the new Mixed Use sites are starting to look to relocate to other industrial areas within the city, putting additional pressure on the very tight industrial market elsewhere.
“It will be interesting to see if they will be able to afford the increased rentals and land prices the new demand is creating — or will they be required to look outside of Auckland to ensure their businesses can remain profitable?.”
Jensen says re-zoning the land may have the desired effect of increasing the supply of residential housing stock, but long-term consequences will include chasing businesses out of Auckland, businesses that provide income and jobs for Aucklanders.
“As this land is redeveloped into housing, a large number of residents who now live relatively close by, will be forced to travel further afield to find employment,” he says.
“That means additional commuters clogging up our roads on the way to outer suburbs such as Drury.
“Trucks and delivery vans will have to fight their way through the traffic in the other direction, in order to service clients closer to the CBD.
“So while the blanket use of the Mixed Use (residential) zone may aim to solve one problem for Auckland, in my view it will create more in the process.”