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Huge levels of industrial activity taking off along airport corridor

25 June 2016
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Auckland, 25 June 2016 - An unprecedented amount of industrial property construction, sales and leasing activity is currently underway around Auckland Airport in order to meet insatiable occupier demand, according to CBRE New Zealand.

Along both sides of George Bolt Memorial Drive and all the way around the airport, land, infrastructure, warehouses and other developments are taking the area to a new level as demand from major occupiers for well-located and developable sites near the airport and motorways reaches extraordinary heights.

CBRE has been a dominant leasing force in the airport corridor, having transacted approximately 250,000sqm of space over the last three years to global companies such as DHL, Fuji Xerox, Agility, and Panalpina, and to local entities such as Eden Office Seating, Hobbs Global Logistics and EuroVintage. This has given the CBRE team unique insight into the area, according to directors Scott Soroka and Claus Brewer.

Soroka says that the main options for companies looking to occupy space start along the eastern side of George Bolt Memorial Drive, where the Westney Road precinct offers predominantly large footprint developments owned by a mixture of private and corporate ownership.

The major facilities in the area have been developed by Goodman, James Kirkpatrick Group Limited (JKGL) and Auckland Airport.  

JKGL has recently completed a new 6,660sqm facility at 27 Verissimo Drive and, in the same precinct, the largest A Grade industrial facility currently ready for occupation in Auckland at 81 Westney Road.  

Offered for lease by CBRE, 81 Westney Road comprises two facilities (81A and 81B) that provide up to 23,957sqm of office, canopy and warehouse space with a stud height of 9.8m rising to 14.2m.  

Claus Brewer, CBRE’s National Director of Industrial and Logistics, says that the property was constructed by JKGL in 2014. “It is available on a long lease, or a shorter sublease, with the ability to offer flexible sizing.  

“With a total yard area of 5,549sqm, the property offers ample truck turnaround and container storage space, plus a combi-lift working area.  

“This property exemplifies - and offers a solution to - the scarcity of large footprint Grade A facilities in the Auckland industrial market. Our research shows that Prime Auckland industrial vacancy now sits at 0.6% and this high stud, tilt slab facility with rapid roller doors, a substantial yard and canopy – and options across two areas – will appeal to the logistics market.  

“Whilst there is substantial activity in the industrial market nearly 85% of all new supply has pre-commitment meaning existing or new Grade A facilities are scarce.”  

Scott Soroka, Director at CBRE specialising in the airport corridor, adds that CBRE has sold 3.2 hectares of the Westney Industry Park to a private owner, with 1.2 hectares available for development and able to accommodate a 6,000sqm building. 

In the precinct, Soroka is also marketing 23 Timberly Road for lease. Of the four developed units due to be completed on 1 July 2016, there are two remaining warehouses with 9.5 metre stud height, good canopies and designated carparks. 

To the north western part of the Westney precinct, Auckland Airport’s prestigious The Landing industrial park begins and extends over to the western side of George Bolt Memorial Drive. 

The Landing offers the latest in large-scale master planned industrial environments for, Logistics and other organisations to lease major distribution facilities, says Brewer.

“The Landing is already home to a number of the world’s largest third-party logistics (3PL) and logistics companies, including, DHL, Hellmann World Logistics, DSV and Agility.

”Auckland Airport is now one of Auckland’s largest property developers due to the size of its landholding, and the airport has applied the latest and best of international design at The Landing.

“With James Lord and his San Francisco-based firm Surfacedesign involved in the project, landscaping, parks and sites are attracting multinationals to establish large, high quality distribution facilities at The Landing. Large local and global organisations with scale and calibre are becoming a significant presence here.”

The Landing still has much more to offer, as it is far from being fully developed, says Soroka. 

“New roads have been going in for the next phase of development, and there is land ready for development with services in place. In addition, plans to create a commercial centre with cafes and amenity will only increase its attraction.

“Big corporates love The Landing for the amenities on offer: a supermarket, shops, golf course, crèche, childcare and numerous eating options are all nearby. This means that companies can fly their staff in without getting stuck in traffic, stay at a hotel, and look after them well.”

Brewer adds that since its inception Auckland Airport has been undertaking a spec build programme at The Landing, most of which has leased on or before practical completion. 

“The spec builds are varied in size, but the sheds are getting bigger as businesses consolidate for efficiency.”

At the far border of The Landing, anchored by a giant Sistema facility, is the 25-hectare Auckland International Business Park; another new precinct where CBRE is active in negotiating contracts for significant occupiers.

Soroka says that companies can own and occupy in this location. 

“This is a popular option, given the low interest rate environment. The business park is anchored by plastics company Sistema, which will move from Penrose to a purpose-built 53,000sqm building on a 10 hectare site, being an amalgamation and expansion of several properties.

“Industrial land for owner-occupation is in short supply across Auckland, so owner occupiers are clamouring to find land to build facilities in this precinct. Land is starting to be in short supply here which has elevated pricing but the banks are encouraging businesses to own rather than lease, and in this low interest rate environment it makes sense for occupiers to own.

“Therefore, if you’re not a global corporate looking to lease a site, you should look at Auckland International Business Park. People with vision who can appreciate the connection with The Landing should give us a call.”

Soroka says that Fletcher Residential has recently gained approval to build 480 homes opposite the Auckland International Business Park at the 33.4ha block of land next to the Otuataua Stonefields Reserve, and a 4.8 hectare block of land in the precinct is currently being subdivided into five smaller blocks for owner occupiers. 

“Two further vacant sites of 1.2 hectares and 2.4 hectares are still available and can be subdivided to suit. These sites will sell quickly as businesses familiarise themselves with the rapidly developing infrastructure. Contact CBRE to express your interest and the team will help with design and feasibility studies.

“Given the cheap interest rates at present, there are many businesses looking to own rather than lease their premises, so it therefore makes great sense for companies looking to own their property to buy here on the edge of The Landing, with its landscaping and many amenities.”

Historically the airport precinct has grown at a greater pace than the economy, says Brewer, and a growing population will only sustain the trend.

“By 2030 almost 2 million people are expected to live in Auckland. Although there’s great debate about where they are going to live, we ask: where will they work, and where will the products they consume be stored?”

Soroka adds: “The airport is only going to grow: new runways, new terminals, new retail and industrial precincts are all being created. With the airport handling just over 17 million trips a year and likely to hit 25 million by 2025, the focus on the area will only intensify, supported by improved road and public transport links. 

“This accessibility will only be enhanced by the opening of the Waterview Connection and the completion of the grade separation project at Kirkbride Road, effectively creating a motorway to the airport. It is not surprising that major retailers are looking to create major distribution centres in the area due to the size of the sites and the proximity to the motorways.

“All the major logistics companies are here. The new spec builds set to be created over the next 12 months will only fuel continued interest in these areas, and particularly along the Auckland Airport corridor. So, if anyone’s considering the airport corridor and would like to know more about their options, they should give us a call. We can give them a tour of the area to discuss where it is going.”

View the NZ Herald article

For New Zealand/international news or global stories, follow us on Twitter: @cbreNewZealand

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