Plan 'dilution' magnifies land shortage

A view of Manukau shows dwindling vacant industrial land with industrial buildings encroaching.

Easing of intensification tipped to hit supply of property for business development.

The dilution of housing intensification in relation to Auckland Council's recently notified Unitary Plan will adversely affect the supply of land for businesses, says Alan McMahon, the national director of research and consulting at Colliers International.

And the Capacity for Growth study updated by the council in 2012 overstated the amount of available business land - including industrial land - in its calculations, he says.

The study suggested more than 3200ha of business land was available for future growth while acknowledging that 42 per cent of that was in rural business use, or in structure-planned or special zones, he says.

"In fact, the effective area of vacant business land, or land with some buildings on it, amounted to some 1875ha. Our independent calculations suggest that this figure may be significantly overstated.

"Our annual industrial vacancy survey for Auckland suggests that less than 800ha of vacant land is available for development in the industrial sector. The inclusion of vacant land zoned for office or retail development, of which very little exists, would make only a small difference to the total.

"Vacancy trends in the Auckland industrial market clearly point to a serious shortage of good-quality property for businesses to use, and in the short to medium term we can only see this problem getting worse."

McMahon says the Auckland Plan, one of the precursor documents to the draft Unitary Plan, included a target to provide "Group One" business land, including large lots, to meet five-yearly demand expectations.

"Group One business land is intended for heavier industry - typically not a comfortable neighbour to residential developments."

Colliers International research monitors about 1200ha of industrial property across Auckland. Its latest survey in September found that less than 7ha of floor space in prime quality industrial buildings was available for lease or sale.

Although there was more secondary-quality vacant property, its vacancy rate was also declining rapidly, having fallen from 4.2 per cent to 3.4 per cent between March and September last year.

McMahon says the Unitary Plan was the biggest topic of conversation in the Auckland property market towards the end of last year.

"Most of the debate ... was centred around the impact on residential development. Some of the intensification recommendations proposed by council officers, which looked like they might well be included in the draft notified plan, ended up being diluted at the last minute," he says.

For example, density controls were retained and height limits reduced in town centres; and less land was earmarked for higher-density terrace housing and apartment buildings, and mixed urban housing zones in the plan than had been expected.

"The impact of less intensification is increased pressure on land supply in Auckland," McMahon says.

"This will manifest itself by way of pressures on the rural-urban boundary and pressures on council and private developers to provide infrastructure like roads, power, water and sewerage at a greater distance from existing services than would otherwise have been the case.

"Dintensification will also exert pressure on the supply of business land across Auckland."