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Not Enough Land for Business in Auckland

28 April 2014

Not Enough Land for Business in Auckland

Research commissioned by Property Council shows that the Proposed Auckland Unitary Plan risks considerably underproviding land for commercial development. This could be exacerbated by residential building activity encouraged on land where business activities should logically have been allowed to grow to support the demand generated by residential growth – resulting in suboptimal outcomes.

Property Council supports the PAUP’s promotion of business activity around the airport and the theoretical capacity for business development in the CBD, metropolitan centres and town centres. However in practice, taking into account development realities, there will probably be a shortage of sufficiently available business land in the medium to long term across Auckland.

The latest Capacity for Growth Study (CfG) undertaken by the Auckland Council reports 1,875 hectares of vacant business land and vacant potential land. However, Research by Colliers International suggests that this may be overstated. There is less than 800 hectares of land currently available for industrial development. The inclusion of vacant land zoned for office or retail development, of which very little exists, would make only a small difference. Industrial zoned land accounts for 70 per cent of business land, according to the CfG study.

If annual long term absorption rates settle at 50 hectares per year, Auckland would require around 950 hectares of land between 2012-2031, in this respect. With the market heating, absorption rates could be significantly higher. Between 1996 and 2006, annual business land absorption rates reached 113 hectares.

There is currently insufficient vacant industrial land to cater for this demand. Auckland Council must prioritise making greenfield and vacant potential structure-planned/special-zoned available. Even more so if absorption rates start to drift higher.

Property Council chief executive Connal Townsend says there needs to be a clear signalling and timely decisions by Auckland Council, so that the development industry has certainty on this matter.

“Given the fluctuation in absorption rates within cycles, the timing of release of land will need to be carefully monitored,” Mr Townsend said.

Property Council notes:

• Structure planned/special zones and vacant potential business land accounts for almost 80 per cent of total business land capacity, while vacant business land accounts for just 20 per cent (including both urban and rural).

• 60 per cent of vacant business parcels in the urban area are less than 1,000 square metres in size with limited vacant business parcels over one hectare. A lack of large vacant sites and a shortfall of vacant greenfield land for business use in the region limits options for firms looking to locate large scale land extensive activities.

• Most land available for industrial development is in the south. This could lead to a shift in employment clusters, and absorption rates are likely to be therefore higher in this area – both of which should be properly accounted for by the Council.

These issues highlight the importance of undertaking robust and timely assessments to meet future business requirements, and for the Council to ensure it is not overly reliant on theoretical modelling and predictions that are not undertaken on a regular basis. Market realities and practical considerations are key and must be accounted for in this respect.

Property Council urges Auckland Council to continue carefully assessing the location and type of activities in business zoned land, to avoid adverse impacts on the vitality of the existing city centre, metropolitan, town and local centres. This is a vital issue, with significant ramifications for Auckland’s future employment, business and economic growth.

About Property Council New Zealand
Property Council is New Zealand’s commercial property voice. Property Council represents New Zealand's office, industrial, retail, property funds and multi-unit residential property owners, investors and managers. Property Council’s branches throughout the country represent some of the largest commercial property portfolios in Auckland, Waikato, Bay of Plenty, Wellington, East Coast/Hawkes Bay and the South Island and Otago region, the value of which exceeds billions.

ENDS

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