Integrating a new central Manukau rail and bus station with a tertiary campus building for 25,000 students, will attract development to the area, says the Manukau City Council.

The council has struck a deal with the Manukau Institute of Technology under which the institute can erect a building of 10,000sq m in return for a 99-year-lease on 3ha of council land at a "peppercorn rental".

The site will be on part of Hayman Park bounded by Wiri Station Rd, Davies Ave and Lambie Drive.

MIT chief executive Dr Peter Brothers said the first stage of the campus should be opened in 2012, with 1500 fulltime equivalent students.

Mayor Len Brown said the council was helping MIT because there were huge benefits in having a tertiary campus in the city centre.

Auckland University of Technology was also opening a campus there soon, on former Carter Holt Harvey land bought last year with the Government's help.

In March last year, the council decided that a 1.8km rail spur from the main trunk line would stop short of Davis Ave. It will instead terminate at Hayman Park.

Mr Brown said the campus deal meant a much bigger and better station building.

The council will contribute $19 million to creating a southern regional rail and bus hub.

Track and station building costs will be met by the Auckland Regional Transport Authority and KiwiRail. Partners are being sought to develop the remainder of the council's 21.5ha of land in the central business district.