Hundreds of hectares of Auckland industrial land have been re-zoned as mixed use (residential) in an effort to help 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 over-use of this zoning 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 work and access various services.
"All around the world, balanced city planning allows for pockets of industrial areas interspersed with residential areas," Jensen points out. "But Auckland Council has now effectively incentivised more intensive forms of land use at the expense of industry - several apartment blocks can be built upon a site which once housed a single factory-warehouse.
"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, recently sold to Goodman, as an example of this trend.
Still referred to by locals as "Camp Bunn", its history dates back to the 1940s, when the US Army built warehouses there to support the Pacific war effort (see image above). The long military sheds, erected in haste using native timbers, have survived to this day.
"The area currently accommodates hundreds of industrial warehouses and businesses that service the inner city. But now it has been re-zoned, the owners are working with council to re-develop it to highest and best use - residential." Jensen believes this will occur within the next five to seven years.
A sympathetic council is working with owners to ensure this happens as quickly as possible, to assist with the housing shortage.
"As a result the mainly industrial tenants who occupy these buildings are only being offered a maximum lease term of five years," says Jensen. "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-of-renewal, if they have one.
"So effectively the tenants only have 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 $5,000 psm and rental levels of $165 psm. 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 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 providing income and jobs for Aucklanders.
"As this land is re-developed into housing, a large number of residents who now live relatively close by will be forced to travel further afield to find employment.
"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 problems in the process."