Re-zoned land is Manukau's drawcard for offices, industry

The local council advocates looking south, but attention should be paid to other areas.

By Bob Dey

When industrial land in Manukau is just over half the price elsewhere in the region but rents are about the same, it is hard to look past Auckland's southern city as the place to develop.

The rental picture must be looked at carefully, however. The latest Bayleys comparison with the Albany Basin shows low rents but high land cost at Albany, whereas a report on the three Albany industrial areas four months ago showed a far greater spread.

Commercial floor space spread around Manukau, 668,000 sq m, equates to about two-thirds of the space in the Auckland central business district, and the vacancy rate is low, at 8 per cent, though it rose half a per cent last year.

The industrial vacancy rate is even stronger, unchanged in the year to February at 3.9 per cent.

Manukau is unquestionably the place to be in New Zealand for proximity to the nation's main international airport and access to labour. While Penrose is still "the industrial heartland," it is full and the development areas are just down the road.

Albany is promoted to North Shore residents, partly to ease traffic congestion, while Waitakere City Council is trying to get a stronger commercial base around Henderson. What Manukau has that no one else can provide is large slabs of available flat land, ready-zoned.

So when the Manukau City Council runs a property forum, as it did a year ago and again last week, it can reel off zillions of statistics show it is bigger and better.

But for the most part the council did not need to get into comparisons with the outside world - what it concentrated on in presenting figures was the vacancy rate movements in its own dozen main commercial centres and where the available industrial land can be found.

Bayleys Research says in its latest Manukau study that vacancy rates illustrate a trend of increased preference for the newer and larger commercial facilities at the expense of the older, established commercial centres.

Examples of older centres losing ground are Hunters Corner (vacancy up 2 per cent to 12 per cent), Manurewa up 5 per cent to 8 per cent, and Howick up 4 per cent to 15 per cent.

Manukau City Centre might face a downturn when the Botany Downs town centre opens, except the city council is supporting greater residential growth in that area. In the past year commercial vacancy at Manukau City fell 1 per cent to 8 per cent, Pakuranga held firm at 1 per cent vacancy and Highland Park was steady on 7 per cent.

Chris Bayley (who has taken the East Tamaki franchise with David Poole in the Bayley family's fast-expanding real estate network), says commercial and industrial takeup of space this year should total 250,000 sq m, about 50 per cent more than last year, largely due to AMP's decision to press ahead on the 17ha at Botany Downs, where it will create 90,000 sq m of mostly retail space.

The Bayleys Research paper indicates that despite the more rapid takeup of land than in the rest of the region, Manukau has far more space available for intensification than at first assumed.

Much of the "vacant potential land" in the city is already developed, but to a density well below the maximum allowed. That shows more than half Manukau's 2900ha of commercial and industrial land as effectively vacant. The report shows prime industrial land at East Tamaki and Airport Oaks costing $80 to $90 a sq m and $5 more at Manukau centre, compared with ranges of $90-$160 at Henderson, $120-$160 in Mt Wellington and Penrose and $140-$170 in the Albany Basin.

The cheapest secondary land is shown as $50 a sq m at Airport Oaks and Manukau centre, $55 at Henderson, but still up at $90 in Mt Wellington and Penrose and $100 at Albany.

For office/warehouse space, the top rate for the office component is in Mt Wellington and Penrose at $140-$170 a sq m, compared to top rates of $140-$150 elsewhere. For the warehouse component, East Tamaki manages a top rate $5 above the rest at $90 a sq m.

The February review of rates at Albany shows rents of $85 to $110 a sq m in the Mairangi and North Harbour estates, down to $55-$70 on secondary space and $70-$85 on prime space in the Rosedale estate.

No matter the rent and land price differentials, Manukau has had a strong absorption rate lately. After three years to 1995 when a total 54ha was absorbed, the industrial absorption rate in each of the subsequent three years has averaged 45ha.