Industrial Land at a Premium, Fringe Office Space Emptying Out. Implications for Unitary Plan

Shortages and moves have implication in Unitary Plan Business Zones Debate

The matter of allowing offices and supermarkets to establish in the Light Industry Zone under the Proposed Auckland Unitary Plan is a vexed one and is currently being argued between Key Retailers Group and Auckland Council before the Unitary Plan Panel.

You can read Key Retailers Group’s Legal Submission in regards to Supermarkets in Light Industry Zones here:

Council’s Legal Submission concerning offices and supermarkets in Light Industry Zones can be read here:

I will leave the supermarket argument to one side while the issue is before the Unitary Plan Hearings Panel.

As for offices in the Light Industry Zones I picked this up from Bob Dey’s Property Report:

Research shows no industrial vacancy but offices empty out

CBRE research shows industrial property opportunities tightening around Auckland, but office vacancy rising sharply in both north & south in the first half of the year.

On the North Shore, the research shows prime industrial vacancy falling to zero, but a rise in secondary office vacancy to 9.2% pushing overall office space available up from 5% to 8.2%.

While CBRE was compiling that research, the place of office developments in light industrial zones – as much of the office space around Albany is – was being debated at the hearing on Auckland’s unitary plan.

Along with questioning development of retail outlets outside centres as a practice which would ultimately degrade business centres, Generation Zero’s planning consultant, John Mackay, said there was a generally acknowledged shortage of land zoned light industrial, exacerbated by its use for non-industrial purposes such as supermarkets & offices.

CBRE’s researchers said prime industrial vacancy on the Shore had been under 1% since 2013, and overall industrial vacancy there was only 2.3%…………

The southern picture

CBRE’s research in southern Auckland (from Greenlane south, but mostly in Penrose & old Manukau)  showed industrial vacancy plummeting and office vacancy soaring in the first half of the year – prime industrial reaching a 10-year low of 0.6% as new supply was rapidly absorbed, empty prime office space rising from 12.5% to 20.1% in just 6 months.

Most of the office space emptied out was in Greenlane.

Prime industrial rents rose 6.3% in a year, secondary 9.3%.

CBRE said the tightening at the top end of the market reflected continued demand for large, modern industrial premises, despite more than 205,000m² of construction being completed in the last 12 months.

Office stock increased by 3700m² as 323 Great South Rd, Greenlane, was completed. Half of it is vacant. Other large new vacancies close by drove the volume of vacant stock in this suburb up from 24,000m² last December to 36,500m² in June, or more than half of the southern Auckland total.

………….

Source: http://www.propbd.co.nz/research-shows-no-industrial-vacancy-but-offices-empty-out/

Albany Metropolitan Centre
Albany Metropolitan Centre

From what I am gathering office activity is moving out of existing light industry zoned areas (and proposed Light Industry Zone in the Proposed Auckland Unitary Plan) and most likely into the Centres (Metropolitan, and City Centre).

This provides a few things in context with the Unitary Plan:

  1. Key Retailers Group and other submitters wanting office activities in the Light Industry Zone becomes defunct looking at current market trends
  2. If people or corporations want to establish offices in the Light Industry Zone then it could be recommended to get a Plan Change to flip the industry zone to either Mixed Use Zone or if next to a Centre extend that Centres Zone. Bearing in mind there has to be no Heavy Industry Zones nearby (which would knock back consents for offices anyhow in a Light Industry Zone)
  3. If (and will mention it now) those wanting to establish a supermarket in a Light Industry Zone then I would recommend seeking a Plan Change to General Business Zone or if residential could be supported a Mixed Use Zone
  4. Market trends possibly suggest that the objectives of the Auckland and Unitary Plans are being realised in that office activity is being attracted to mainly the Metropolitan Centres and the City Centre with residual demand carrying over into the Mixed Use Zone

Industrial land both Light and Heavy is short especially in Albany and throughout Southern Auckland so it needs to be utilised for just that – industrial. Commercial activities have their zones through the Centres, General Business and Mixed Use Zone which if not enough can be sorted through the rezoning exercises next year.

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