Property Insider: Kirkpatricks plan a $135m Karangahape Rd boost; Colliers’ $100m+ Westgate sales in last six months; big day for Fletcher Building; LT McGuinness win

James Kirkpatrick Group plans this mass timber office block for 538 Karangahape Rd. Photo / Resource consent application to the Auckland Council

Kirkpatricks put case for $100m planned building; Colliers crushing it at Westgate, Fletcher’s future to be spelt out, LT McGuinnes scooping top builder award - all in today’s Property Insider.

James Kirkpatrick Group has put its case for a $100 million mass timber building in Auckland near a new City Rail Link Station, releasing the findings of a study showing a $135m benefit to the area.

This comes ahead of the Auckland Council’s imminent decision on its intensification rules - Plan Change 78 - as well as an appeal on consent being rejected for the development, which is expected to happen in June.

Kirkpatricks got Property Economics to estimate the economic impact of the proposed development at 538 Karangahape Rd.

Building the block would deliver more than $75m in employment opportunities alone, that study found.

Post-construction, Property Economics forecast an increased daytime population density and local spending to drive an estimated additional $12.5m in business spend and $800,000 in retail spend from local workers annually.

538 Karangahape Rd (right) near the Ponsonby Rd intersection, where James Kirkpatrick Group plans the new mass timber offices. Photo / Google Street View

The Herald reported in March how the Auckland Council independent hearing commissioners rejected the plans.

RMA Reform Minister Chris Bishop said it was “insanity like this which is driving us to reform the Resource Management Act”.

Hearing commissioners Janine Bell, Bridget Gilbert and Heike Lutz refused plans for the building, even after modifications, citing submissions from Waitematā Local Board members Alexandra Bonham and Allan Matson.

James Kirkpatrick Group plans this office block at 538 Karangahape Rd. Image / Resource consent application

“The principal concern for the board is the scale of the development,” the commissioners’ report said.

The plans failed to meet tests under the Resource Management Act (RMA) and were contrary to the Auckland Unitary Plan objectives and policies, the commissioners said in their February 7 report.

The new report for Kirkpatricks said using mass wood in construction had carbon sequestration benefits, meaning it captures and stores atmospheric carbon dioxide to help mitigate or defer climate change.

A concrete building would emit carbon.

Crushing it at Westgate

Colliers has sold more than $100 million of property at Westgate in the last six months, says Josh Coburn, site sales and capital markets director.

“The Colliers capital markets team has had a stunning run in Westgate, with over $100m in sales over the last six months.

“Supporting the growth of the wider Northwest, Westgate is a hotspot of investment demand and the Colliers team has been at the forefront.”

He listed Woolworths Westgate, Bunnings Westgate, Placemakers Westgate and Magnum Hire Westgate as properties sold lately.

A private investor and two NZX-listed entities were in on the action.

Richlister Ben Cook sold the Bunnings store to NZX-listed Investore. Last August, the listed entity said it would settle the Westgate shop deal by December.

Investore said the deal was in line with its targeted growth strategy.

Westgate is seen as an attractive location for investment due to the forecasted rapid population growth in the area.

This column reported on Centura’s sale of Woolworths Westgate in March.

Woolworths - a number of supermarkets have sold lately. Photo / Investore

Fletcher Building next month

More about Fletcher Building and its future will be known when details are released at an investor day on June 24.

Management, including new CEO Andrew Reding, is expected to give details of its strategy for capital structure, operating model and portfolio reset.

Andrew Reding will become chief executive and managing director of Fletcher Building. Photo / Supplied

But maybe don’t expect anything fast.

Jarden analysts Grant Swanepoel and Harrison Elliott released a note about this on May 14, headlined “Strategy day hopes and a drawn-out rebound”.

They focused on three areas:

Capital structure

Likely focus areas include reducing the average interest cost from 7% to around 5%, reinstating dividends and shifting gearing guidance for FY25 onward from a profit multiple to an absolute net debt range, the analysts forecast.

Operating model

“An update will be critical for restoring investor confidence in our view, particularly following past execution disappointments.

“Management has undertaken divisional profitability analysis, including branch-level reviews at PlaceMakers.”

Reding favours a decentralised approach, empowering local teams to make commercial decisions.

“We expect the messaging will be evolutionary rather than revolutionary, with recent under-performance framed as cyclical and the business positioned for recovery.”

Portfolio strategy

The company continues to assess various portfolio options.

“Laminex may be considered for monetisation, though market conditions complicate timing. Housing may be restructured for a partial divestment, although weak market conditions limit near-term feasibility; other value-unlock alternatives are reportedly under consideration,” the analysts wrote.

They see a credible path for the company to exit local construction within 12 to 18 months, reducing exposure to contract risk.

This month, the Herald reported on Fletcher Living’s $500m The Hill housing estate, under construction at Ellerslie.

Chief executive Steve Evans showed off those two-level homes at the northern-most end of the 6.2ha site bought from Auckland Thoroughbred Racing in 2021 for what was said to be more than $100 million, although no price was disclosed.

Piles are being driven for Naylor Love to build the 50-unit six-level Belvedere, the first of four higher-rise blocks, including one planned track-side for Fletcher Living’s Vivid retirement village brand.

Excavations and groundworks in Ellerslie for The Hill (centre) above the Auckland Thoroughbred Racing Club track. Photo / Carson Bluck

All up, just under 400 new residences are planned on what Fletcher refers to as Remuera, with the site on Ladies Mile near Abbots Way in the Peach Pde/Derby Downs Pl vicinity.

Fletcher will ask around $3m each for those first four homes.

Evans said the company would work on the wider site for a further five years, having started by contouring the steeply sloping ex-steeplechase area.

An upper loop and lower loop road have been created at the new housing estate. Photo / Carson Bluck

Deposits were paid on 21 of the 50 units in the first apartment building “so we’ve got past the hurdle”, Evans said this month.

Hats off to LT McGuinness

What a difficult site, what a challenge, what a complicated building, what standards to achieve - and what a stunning outcome.

Congratulations to LT McGuinness for winning the $10m-plus commercial project supreme Master Builders’ award.

And what a building it won for: Ngā Mokopuna, Te Herenga Waka Victoria University of Wellington’s new hub on Kelburn Parade.

Te Herenga Waka Victoria University’s Nga Mokopuna The Living Building, previously called The Living Pa. LT McGuinness Wellington won a supreme Master Builders award for this in May. Photo / Master Builders

The builder has been involved in many significant Auckland developments, successfully migrating north.

New and refurbished buildings in the Wynyard Quarter, Hobsonville Point and Queen St are just a few of its big achievements.

We hope to hear more from the builder about its current projects as well as its plans.

Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.