December 3, 2018
The continuing growth of e commerce and the opening of the Waterview tunnel are intensifying already strong demand for industrial premises close to Auckland International Airport.
Bayleys’ South Auckland industrial team has recently concluded five substantial leases in the airport industrial precinct which will generate total net annual rental income of close to $4.879 million plus GST for their respective landlords.
South Auckland manager Scott Campbell, who is also Bayleys national director industrial and logistics, says a big driver behind the strong demand for substantial premises close to the airport is the expansion in e-commerce.
“With the ongoing increase in sales being done via the internet, speed to market is very important so having modern distribution centres close to airports and motorway networks provides competitive advantage,” says Campbell. “The opening of the Waterview tunnel and the associated western ring route of motorways has enhanced the airport’s connection to the rest of Auckland, providing faster access to rapidly growing West Auckland and markets north of the harbour bridge.”
The largest of the Bayleys’ leases encompassed a net lettable area of 9,816 sq m on 1.6377ha of land at 8 Airpark Drive, Airport Oaks. With long standing tenant Bendon New Zealand’s lease expiring, with no rights of renewal, Scott Campbell and colleague Jamsheed Sidhwa were appointed to take the property to the market for lease.
“After an in-depth analysis of the tenancy options, Bendon was able to secure a new six-year lease,” says Campbell. “We negotiated a deal that worked for both parties with the landlord retaining flexibility by not including further rights of renewal in the lease.”
Bendon will utilise the premises as its New Zealand head office and distribution centre. The latter includes a 5577 sq m high stud warehouse with a 1345 sq m breezeway canopy.
In another substantial transaction, third party logistics provider DB Schenker NZ Ltd has leased an 8652 sq m high-stud warehouse and office building on 1.33ha of land at 8 Amelia Earhart Ave in what Jamsheed Sidhwa says is the final part of a two-stage master plan for expansion at Auckland airport.
With 150 metres of high profile exposure to George Bolt Memorial Drive, the property was until recently occupied by Toll Logistics which has consolidated its operations at the Savill Link business park in nearby Otahuhu.
DB Schenker is owned by the German logistics giant Deutsche Bahn and describes itself as the world’s second largest transportation and logistics services provider. Prior to its 8 Amelia Earhart Ave lease, Sidhwa negotiated a 10-year lease to the company early last year over 7,500 sq m of purpose-built logistics accommodation on a 1.21ha site at adjoining 4 Amelia Earhart.
“DB Schenker has significant expansion plans in New Zealand and the integration of its airport operations across these two properties will almost double its warehousing capacity in this location,” he says. “That’s a big vote of confidence in the future of Auckland and New Zealand’s economy and business environment.”
In a third large transaction, a substantial land holding and warehouse building at 9 Richard Pearse Drive, Airport Oaks has been leased to Apollo Motor Homes for 10 years.
Scott Campbell, who negotiated the lease with Nick Bayley, says a significant attraction for the ASX listed tenant was the significant amount of undeveloped land on the 1.71ha site.
“The landlord will convert around 5000 sq m of grass to a hard stand area for vehicle display prior to Apollo Motor Homes’ occupation. The company will use the property for the renting and sale of vehicles and will also have access to 4328 sq m of high stud warehousing and 994 sq m of office accommodation.”
The airport precinct’s industrial vacancy rate has halved since 2015 from 3.1 per cent to a neglible 1.5 per cent, according to the latest Bayleys Research Auckland industrial survey undertaken earlier this year. This is despite significant development activity over the past three years which has added close to 30 per cent more industrial space in the airport area covered by the Bayleys Research survey
Sidhwa says the substantial increase in the amount of new construction around the airport is a combination of large complexes being purpose-built for expanding businesses as well as speculative development.
“Because of strong leasing and owner occupier demand for premises and low vacancy, developers, including Auckland International Airport Limited (AIAL), are comfortable about building with little or no tenant commitment because they are confident the space won’t remain vacant for long.”
Two other leasing deals Sidhwa negotiated were at a duplex comprising two new high stud warehouse and office premises speculatively developed by AIAL at 15 Maurice Wilson Avenue in The Landing business park. These were leased to separate tenants at a total net annual rental income of $971,790 plus GST
Furniture company Early Settler has taken a new six-year lease over a net lettable area of 4288 sq m. The other transaction, which Sidhwa negotiated in conjunction with Nelson Raines, was a six-year lease of 3678 sq m to Sheppard Cycles, which describes itself as Australasia’s largest bicycle distribution company.
Two Airport Oaks leases to logistics companies negotiated by Nick Bayley were a six-year lease of Unit 8, 113 Pavilion Drive encompassing 1822 sq m of high stud, clear span warehousing and modern office/amenities and a four-year lease over 960 sq m of warehouse and office space on a 2400 sq m site at 99 Montgomerie Rd.