Soaring on the fringes
Total Property - Issue 4 2019
American academic and aviation consultant John Kasarda said "airports will shape business location and urban development in the 21st century as much as highways did in the 20th century, railroads in the 19th and seaports in the 18th".
Forbes reports that half of the Fortune 500 companies in the US are now headquartered within ten miles of a hub airport.
In New Zealand, for now, the airport locational parameters have been set and we must work with what we have.
Air traffic and visitor numbers are growing. Airport entities are lifting regional economies, undertaking upgrades and commercial developments, broadening revenue streams and reassessing use of substantial property portfolios.
Airport property and privately-held property around airports is being transformed. Investors, developers and businesses understand the benefits of locating in or near airports, including connectivity, convenience and concentration of people.
Auckland International Airport continues to evolve under its multi-billion dollar, 30-year programme to create “the airport of the future”.
Its interim report in February said scheduling of some projects had been revised and several are in procurement stages.
This includes work on northern stands and taxiways and the northern road network, described as “critical enabling or capacity projects to support the wider airport development programme”.
On the airport fringe, The Landing Business Park is being developed. With 150 hectares earmarked, it is 40 percent built-out and lifting surrounding commercial and industrial property. Leasing vacancies in the airport corridor have fallen to historic lows of around 0.9 percent, according to Bayleys Research.
Brent Buchanan, head of direct property for Fisher Funds, says its recent acquisition of a 1.71 hectare freehold industrial property in Richard Pearse Drive was based on compelling fundamentals.
“The connectivity to resilient arterial routes such as State Highway 20, and its close location to the ever-expanding Auckland Airport, featured highly in our purchase decision-making.
“Equally, the quality of the building and the 10-year lease to established ASX-listed international tenant, Apollo Motorhomes, played a large role.”
On the fringes of Queenstown International Airport there’s been extraordinary commercial development, including the Remarkables Park Town Centre, Five Mile Centre and Queenstown Central precincts.
Yet debate continues around a new airport for Central Otago. A vocal group suggests Queenstown Airport should close and a new international airport serving Central Otago and the Lakes District should be located elsewhere.
In the meantime, commercial and industrial property is benefitting from growing tourism and investment by Queenstown Airport.
Safari Group, a New Zealand developer and builder of hotel/apartment complexes, is proactive in Queenstown.
Director Damien Taylor says proximity to airports has influenced a number of land acquisitions.
“Any hotel business needs to access a range of markets to ensure success, with tourists and corporate travellers wanting to stay in close proximity to the airport central to this.
“We’ve completed development and construction of two hotels very close to Queenstown Airport – Ramada Remarkables Park and Wyndham Garden Queenstown – and will have Ramada Kawarau River under construction within the next month.
“Airport growth in Queenstown has attracted even more tourist and domestic travellers into the region, which means there is high demand for good accommodation.”
The Bay of Plenty is a shining light with a revitalised CBD, huge investment in shopping complexes and rising air passenger numbers.
Tauranga Airport’s terminal has been revamped and extended to future-proof the hub. Surrounding commercial and industrial property is highly sought-after and is largely on airport leasehold land.
A hangar facing the main airstrip was recently purchased by Peter Whale, a local investor who says the scarcity of opportunities so close to the terminal made it a sound business decision.
“Tauranga is growing rapidly with many high-net-worth people coming into the region, often bringing personal aircraft, so owning a hangar has inherent long-term value as a leasing proposition,” he says.
“Specialist aviation-related businesses will always be seeking premises close to the terminal, too.”
A former avionics technician and private pilot licence-holder, Craig Saunders, secured the hangar for his flight-simulator business, “The Aviator Experience”.
“The investment made by the airport into upgrading the terminal can only add value to our business offering,” says Saunders.
Wellington International Airport Limited (WIAL) commenced a $15 million upgrade last year. A multi-level carpark and transport hub opened recently, as did a Rydges hotel – New Zealand’s first hotel to be fully-integrated with a terminal.
WIAL has a diverse portfolio of commercial, industrial, retail and residential properties. The Airport Retail Park, on its southwest boundary, has elevated the area’s retail destination profile, with other investors and developers leveraging off the benefits.
A prime 1,317 square metre redevelopment site on the corner of Kilbirnie’s Onepu and Rongotai roads has been placed on the market by a group that owns a significant portfolio around the airport. The site has PAK'nSAVE directly across the road and KFC, ANZ, Countdown and Warehouse Stationery nearby.
Kilbirnie has consolidated as a regionally-significant suburban centre, largely due to its proximity to the airport.
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