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WELLINGTON INDUSTRIAL ANNUAL 2011

Industry’s Northern Migration Continues

The exodus of traditional industrial users from Wellington’s inner city suburbs has continued over recent years as land use patterns evolve.

In 2006 Bayleys Research removed Te Aro from its Industrial Survey as higher value end users replaced industrial occupiers. Recent years have seen an evolution of use within the eastern suburbs of Rongotai and Miramar.

Rongotai is undergoing a transformation from an industrial to a retail precinct. The latest significant stage in this progression has been the development of the new 10,000m² Bunnings store on a site of approximately 1.3 hectares in Kingsford Smith Street. This continues the trend for the precinct which began with the development of the Airport Retail Park.

In the period from 2003 the total floor space occupied by industrial users in the precinct has fallen from approximately 93,000 m² to approximately 56,750 m², a reduction of nearly 40%

A primary driver of the transition to retail use has been the increase in ground rentals payable in the area. Reviews in 2009 saw significant increases in rental values pushing them to levels which make industrial use or new industrial development financially unviable. It seems inevitable therefore that traditional industrial users will vacate the precinct as there current leases come to an end.

In neighbouring Miramar the film industry occupies a vast majority of the industrial stock. While therefore warehouse premises remain in situ the traditional manufacturing users are no longer present in any significant numbers.

Of the close to 45,000 m² of floor space monitored by Bayleys Research, just over 80% is now occupied by the film industry.

As industrial use within the inner city suburbs thins out new precincts, more suited to modern day industrial users, are in expansion mode. An obvious example of this is Porirua situated approximately 20 kilometres north of Wellington’s CBD. The city offers industrial users a wide range of advantages. It is situated on State Highway 1 and access roads from the highway to the primary industrial locations are suitable for “B Train” use.

State Highway 1 offers easy access to Wellingtonport and airport along with other centres to the north.

The city also offers a range of land options which differentiates it from many of the more established industrial precincts. Land in the precinct is generally more affordable than in areas such as Seaview. Smaller road frontage sections can command values of up to $260/m², however a majority of land sales over recent times have reflected a range of between $150 and $220/m².

The city has attracted a wide range of users. Central Park (ex Todd Park) has become a distribution and logistics hub while development areas such as Broken Hill has seen a number of owner occupiers taking the opportunity to have buildings designed and built for them. The area has also been successful in attracting established businesses from other precincts. Windsor Engineering for example re-located from Grenada, largely due to the fact that they were able to amalgamate their operations within a single building which had not previously been possible.

Further north the Kapiti Coast offers further opportunities for industrial users. The Paraparaumu airport project has attained all required regulatory sign offs and direct flights to Auckland will begin in October. The airport’s owners have developed a masterplan for the development of an airport business precinct named Kapiti Landing Business Park. The Park has a developable area of 300,000 m².

The freehold ownership of the land will be retained by the airport company with occupiers being offered occupational leases within design build premises. The scale of the development allows a high degree of flexibility with space requirements ranging from 300 m2 to 30,000 m² able to be accommodated. The first phase of development has begun with Mitre 10 Mega having taken occupation of the first of the buildings to be completed having committed to an 18 year lease.

Outside the airport precinct however industrial expansion is being restricted through lack of suitably zoned land, a situation being reviewed by the District Council. A possible widening of the current tourism zoning at Lindale may lead to greater opportunities being made available.