Land shortage could force release of more land
When vacant land for industrial development is as low as it is in Auckland (2.1%) you could surmise two things:
- Auckland economy is in good shape
- We need more land
Industry and the big five industrial complexes of Auckland are not usually the ones to generate news stories about ribbon cutting ceremonies and flash new building proposals unlike their residential, commercial and civic counterparts. However, the big five complexes do generate a large proportion of economic activity with over 100,000 people employed in those complexes.
From Greater Auckland:
Industrial is important
In more than two years of Development Update posts, I’ve hardly ever mentioned industrial development. It’s hard to show in a map like the RCG Development Tracker, so I don’t cover it there.
But even in a modern economy like Auckland, with a strong services base, industrial properties are important. Warehouses, factories and other industrial buildings are where a big slice of the economy happens, and where 100,000+ Aucklanders work.
Looking at aerial photos of Auckland, the industrial areas are pretty easy to spot. They’ve got a characteristic grey colour. The big ones are:
- Onehunga/ Penrose/ Mt Wellington
- Airport Oaks, on the way to the airport
- Wiri/ Manukau
- East Tamaki
Most of the major industrial areas have had expensive road upgrades, or are in line for them. But the “third main”, a third railway line running to the port and potentially connecting many of the areas above, has had to wait. In a small sign of progress, the Auckland Transport Alignment Project (ATAP) at least lists the third main as a project which could be completed in the next decade.
The current scene
But I digress. This post is about development, so where is new industrial happening?
Not only are the ‘big four’ above the largest industrial areas today, they’re also getting the lion’s share of industrial growth (based on recent building consents).
Highbrook, in East Tamaki, is a whopper. It’s probably the largest and most valuable business park in New Zealand, worth more than $1 billion and with more than 380,000 square metres (sqm) of floor space. Eventually, that will reach 530,000 sqm. Highbrook’s not a typical industrial setting – it has a mix of industry, offices and even retail and accommodation. Some of those uses are shown in the Development Tracker.
The airport is another big growth zone. Most of the new buildings you’ll see going up on the way to the airport are on land owned by Auckland Airport itself. It owns huge areas of land north of the passenger airport, but it’s only in the last few years that it’s stepped up development there.
New buildings are also going up around Wiri/ Manukau, one of the recent examples being Z Energy’s biodiesel plant. This opened last year, converting waste tallow into low-emissions fuel.
Onehunga/ Penrose/ Mt Wellington is pretty much all developed, but there’s still growth happening as existing buildings expand or get replaced with newer ones.
Oh, and one more thing: industrial buildings are currently in short supply in Auckland, just like most other kinds of buildings really. Colliers, one of the big real estate companies, reckons that just 2.1% of industrial floor space in Auckland is vacant, “the lowest on record since our survey began over 20 years ago”. Eep.
The Unitary Plan makes a lot more industrial land available – e.g. in Drury South, undeveloped land east of the airport, Silverdale and Westgate – but it’ll be years before these areas become major employers. Growth tends to want to go more centrally, and industrial has long timeframes anyway. Highbrook was zoned in 2001, and it might be fully developed around 2021.
To give an idea in nominal terms of economic generation from industry this figure from the Panuku Development Auckland – Transform Manukau High Level Plan gives an indication:
Note: The figure will contain some commercial activity but the bulk of the economic generation will come from the industrial complexes like Wiri
With industry still going strong and continuing to expand especially in the South it is crucial that enough land is supplied ahead of time to cater for industrial demand. While Wiri still has land available it wont be long until that supply is exhausted and a new complex will need to be ready. Drury South is has been zoned Heavy Industry and becomes the fifth complex ready to take the load within the next few years.
That said is our transport system ready for the continued development or Wiri and the new developments out in Drury?
The answer to that is both a yes and no.
While Wiri has the Port of Auckland Inland Port facility to allow truck-rail-truck transfers the Drury South complex does not. Also we do not have the Third Main online yet so capacity for extra freight trains (and passenger trains) is limited on the Southern Line until that Third Main from Papakura to Otahuhu is built ($58m + $144m). However, even with the Third Main the Drury South complex will lack a facility to allow inter-modal transfers that Wiri and Southdown contain. Given Drury’s geographic location sitting on the southern urban fringe and access to both rail and motorway for freight heading in and out of Auckland building a new inter-modal port within the next five years at Drury would be a very prudent idea.
We know rail is the most efficient land transport mode for moving goods over longer distances while the Southern Motorway will face congestion from Drury going north as the South continues to develop (a 50 wagon train is around 100 trucks off the motorway). So we better get planning for a new inter-modal facility sooner rather than later.
The Future Urban Land Supply Strategy
We know Auckland Council is looking at rejigging the Future Urban Land Supply Strategy that will determine which Future Urban Zone land is flipped to a live urban zone (see: Have Your Say on the Release of Greenfield Land for Development. UPDATED). Given the pressures in the South at the moment (Growth Pressures in Southern Auckland: Is/Should the Super Metropolitan Centre to Make a Comeback?) I am inclined to open up the Southern Future Urban Zone land at a quicker pace than I would in the North and North West. My reasons can be seen/heard here: The Auckland Donut: A Presentation to the Council Planning Committee. Yes that does include bringing the land at Puhinui and Takanini online faster than originally envisaged especially for light industrial use (the land is not good for residential).
Industry does take a while to get going and a complex to reach full power as John mentioned over at Greater Auckland. But confidence needs to be given to the industrial sector that land will always be available near good transport routes to give both economic and job security now and into the future.