Harbourside gem worth polishing

Taking steeply sloping former industrial land on a brownfields site and converting it into business use was "a calculated gamble".

"Rough diamond, needs polishing."

So said the sign promoting the sale of a block of land on Avondale's Rosebank Rd in September 2000.

The plot had been languishing on the market for six months when Kensington Properties managing director Patrick Fontein saw it.

With the BMW ready to cruise the long driveway down to the water and the $31 million office park he finished last year, Fontein recalls his good fortune buying the land in 2000.

Blocks were going for a pittance at just $55/sq m. As he puts the car back into gear, he tells of how values in the area have since shot up to $230 to $300/sq m.

As Fontein puts it, taking steeply sloping former industrial land on a brownfields site and converting it into business use was "a calculated gamble". Geotechnical difficulties included tackling site slippage and resolving how to build on peat and soft soil.

"The ground in the lower parts of the site was so soft and peaty that initial geotech reports stated nothing could be built there," he said.

Two of the three lots which were amalgamated for the park were owned by Orica and Sellys and were rough and largely unserviced.

"No developer had attempted high office content new buildings in Rosebank Rd," Fontein recalls.

"We knew that any one of about 20 critical issues could delay or stop our business park."

These included resolving complex stormwater issues, the need to bring extra electricity cables and transformers to the site, building on contaminated land, trying to widen a driveway lined with protected native trees and building on a site in the coastal management area.

Before building began, Kensington sunk 120 boreholes and devised individual foundation details to deal with every site issue.

It paid off.

Last month, Fontein bagged this year's supreme Property Council awards for the project. The prize is sponsored by Rider Hunt.

On June 15, he escorted 55 council members on a site visit, including Macquarie Goodman Property Trust chief John Dakin, hungry to expand his listed vehicle with more properties.

But Harbourside is not for sale. Fontein's formula in developing the park was to sell most of the buildings to owner/occupiers or investors.

Harbourside is Fontein's second business park.

His first was the five-building Pacific Business Park at Mt Wellington's 4 Pacific Rise, a project which worked with, not against, the steep contours of the site. The 43,000sq m park was finished in 1997 and in 1998 it won a Property Council prize.

Fontein has a record of finding high-value uses for cheap land. Twice, he has found sites in down-at-heel areas where few saw a future - first in Mt Wellington on the side of Hamlin's Hill and now at Avondale.

He has transformed those sites, bringing new uses and earning high returns. Visits to the United States, Britain and Europe helped form his vision.

"Internationally - and to some extent here - business parks are owned by one single large corporate owner," he said.

He saw the potential of wider occupancy for owner/occupiers whose needs could meet through pre-construction consultations.

Soft and peaty blocks were pre-consolidated, as large volumes of dirt were loaded onto the plots for three months, then moved elsewhere on the site.

Because office buildings were completed in stages, Kensington progressively moved a 2m-high pile of dirt from one building platform to the next.

Printer Oliver Young was the park's first owner/occupier.

"Wow, this is us," said managing director Nigel Oliver as he stood on the site with the tide in, looking towards the Sky Tower.

Six months later, Tiagra had finished a 13,342sq m warehouse for the high-tech printing operation and a generous 10,543sq m in offices.

A $1 million gain on the building's value since completion is the icing on the cake.

So what next for Kensington?

Expensive land prices have made it impossible for Fontein to go for the trifecta of office park developments.

Instead, he is working on two large Auckland joint venture projects with land owners who will retain the land which he will develop, although few details have emerged.

Fontein's new challenge is to make a success of that new formula.

Rough diamond

Who: 22 businesses in office and warehouse space built by developer Kensington Properties, working with Tiagra Construction and Acqua Architecture

What: Harbourside Business Park is seven buildings totalling 2ha of office area on a 4ha site;

When: built between 2000 and June last year

Where: 481-527 Rosebank Rd, Avondale on north-facing sloping land fronting the mangroves and harbour

Why: business tenants demanded large purpose-built warehouse/offices and extensive parking close to the CBD on north-facing slopes with water views.