A critical scarcity of high quality industrial and trade premises available for lease in Auckland’s central industrial area is leaving many businesses with literally nowhere to go, says Richard Paul, asset manager for industrial and residential developer Southpark Corporation.
Paul cites research figures released by Colliers International stating there was no ‘prime’ or A-grade industrial space available for rent in Penrose and Onehunga as at February this year – with the vacancy rate hitting zero for the first time since records began. “The situation is barely any better in neighbouring Mt Wellington, with prime industrial vacancy down to just 0.2 per cent,” Paul says.
“For strongly-performing businesses looking to expand, move or set up a branch in the popular central Auckland suburbs right now, high quality options are virtually impossible to come by.
“With zero availability of A-grade premises in the industrial precincts of Penrose and Onehunga, and very little space available in Mt Wellington, businesses are having to postpone their plans to move, or look further afield to suburbs like East Tamaki, Wiri and West Auckland.”
Paul says central industrial area’s great attraction for businesses is its convenient location mid-way between the central business district and Auckland International Airport, and with a lack of available land for new developments, demand is far outpacing supply.
“As Auckland’s original industrial area, much of the building stock in Penrose, Onehunga and Mt Wellington is older, low stud facilities originally constructed in the 1960s and 1970s for manufacturing. These buildings don’t meet the needs of today’s distribution and trade focused businesses which are looking for high quality warehousing and showroom space in the area.”
With vacant land being almost totally unavailable, some regeneration is underway, with older buildings being demolished and modern, high stud, efficient facilities being constructed in their places. However these are almost always pre-committed, leaving businesses clamouring for what little A-grade space becomes available following lease expiries.
Paul says high quality smaller units are particularly needed. “Southpark and other developers are constructing large head office and distribution headquarter buildings such as Ideal Electrical’s new facility which is under construction on Great South Road. But we’re also aware of several businesses which are looking for more compact premises to use for localised retail distribution and trade showroom purposes.”
In response to this demand, Southpark Corporation is ‘spec building’ an uncommitted multi-unit development at 63 Hugo Johnston Drive in Penrose. Eight units of between 250 sq m up to 1200 sq m in size are offered for lease, with good canopy coverage, flexible office components and a central truck access and parking area.
Paul says this class of development is in dire need among occupiers. “Nobody else is building smaller A-grade unit titled stock like this, as it’s perceived as riskier, complicated to manage and difficult to lease until construction is completed. However we’re confident that based on pent-up demand, these units will be received well by the market.”
With practical completion due at time of publication, Southpark has just kicked off marketing the units, which will be managed in-house by the company’s own property management team. “We’ve now got a completed product to take to the market with a skilled and experienced team behind it, and we are receiving qualified inquiries as marketing gets underway.
“With vacancy rates at zero, the units present attractive options for businesses which require new facilities in a central Auckland location immediately,” Paul says.
“We’ve taken care to design units that will suit a range of occupiers. When planning ‘spec’ builds, every eventuality must be anticipated and all bases covered in terms of occupier requirements like providing flexible office components and maximum cubic storage capacity. In this respect, these functional and attractive units will tick all the boxes for many businesses.”
Staff and visitor parking, a public café and truck manoeuvring space will also be provided in the new development. “The central yard is container friendly and there is adequate space for a B train trailer unit to make deliveries to the units. We’re confident that for tenants looking for new, compact, A-grade facilities in the central Auckland industrial area, this development will be an attractive proposition.”
The development is mirrored on a similar product next door at 61 Hugo Johnston Drive, also developed, owned and managed by Southpark. “
The success of our units at number 61 has also been a contributing factor behind our decision to proceed with the new development on an uncommitted basis. The existing units next door were leased up very quickly and are now home to local distribution hubs and trade showrooms for companies including Bosch and Siemens,” Paul says.