A Wiri property that housed New Zealand Post’s South Auckland mail centre is for sale.
The 3570 sq m former mail centre at 84 Kerrs Road, Wiri is expected to sell for below replacement cost.
Colliers International central industrial manager Nigel Ingham and broker Simon Green, who are marketing the property on a 5749 sq m site, say it would cost $5-$6 million to build today. “A buyer could potentially own it for well below this figure,” says Ingham.
“A developer, investor or owner-occupier couldn’t buy the land and erect the building for the price they could own it at.
“Land in Manukau has recently been selling for between $250/m2 and $350/m2 and combined with construction costs of about $3.3 million, professional fees of about $350,000 and allowing for a contingency of $275,000, a new property of similar standard could cost up to $6 million,” says Ingham.
He says the simplified feasibility doesn’t take into account the holding and finance costs in obtaining consents for new premises and a possible build time of seven months or any additional infrastructure, such as air-conditioning. “This would take the cost of a new building to more than $6 million.
“Anybody who purchases New Zealand Post’s existing freehold stand-alone site will be getting exceptional buying.”
The former mail centre is on the market after New Zealand Post amalgamated it and the Auckland mail centre to new $30 million one-level, 17,000 sq m premises at Highbrook in East Tamaki.
New Zealand Post’s new Highbrook premises include new mail sorting and processing technology, which has been introduced in New Zealand Post’s six metropolitan sites around the country. The company’s move is part of a major programme of work in its mail processing business. Three new mail sorting centres in Auckland, Waikato and Christchurch have been built and three other centres have undergone major refits.
The South Auckland warehouse and office property was bought by New Zealand Post just before the 1987 sharemarket crash. The spec-built property wasn’t finished before New Zealand Post signed a purchase agreement and it was able to make changes to the office layout to suit its requirements.
Green says the good quality warehouse is air-conditioned with heat detection systems and a suspended ceiling. “If the ceiling is removed a new buyer has an excellent warehouse.”
He says there are few opportunities to buy a totally air-conditioned substantial warehouse in South Auckland that would suit temperature controlled businesses, such as food and chemical storage or printing. “To set up similar infrastructure in an existing building would be very expensive.”
The property has a number of additional features, including good street presence, ample parking, drive around ability, making it easy for truck manoeuvrability and traffic movement efficiency and a business six zoning under the Manukau City Council’s District Plan.
“Land with this zoning is being swallowed up as it has the fewest number of controls for business operation,” says Green. The zone is specifically for heavy industry and manufacturing to run 24 hours a day seven days a week.
The council says business six zoned land is a scarce resource and of major importance because it is the primary location for potentially offensive or noxious activities. It has restricted land with the zoning to these types of businesses and, as a result, there is a more limited range of activities.
The property is located in an already established area. “The address is well known to more than 500 businesses who visit 84 Kerrs Road every day to pick up mail from the private boxes located on the property,” says Ingham.
Many of the companies with private boxes are major corporate who have invested in Wiri and Manukau.
“These areas have been attractive areas for investment by both offshore and on-shore buyers,” says Ingham. The council has launched Locate2manukau to attract new offshore investment in manufacturing and international trade services sectors. Mayor Len Brown says the council also works with existing investors to help them expand and develop their businesses.
In addition to having one of the fastest growing populations in New Zealand, Manukau also has one of the best performing economies, estimated to have grown in the past few years by 5.7 per cent, compared to 5.1 per cent in the Auckland region and 2.2 per cent for the national economy. In the year ending March 2006, employment in Manukau grew 5.6 per cent.
Ingham says buying the New Zealand Post’s property make sense for a large business as over the past year the industrial market in Wiri and Manukau has been constrained by a lack of high quality substantial properties for sale. “It is one of the few on the market.
“Demand for prime property is sharp, and investors are still willing to pay good prices to secure quality premises. There has been a softening of yields because of rising interest rates and global liquidity problems, but prime industrial property is still a highly sought after asset.”
Kerrs Road is in an established industrial pocket with good transport linkages to Manukau’s CBD – where most commercial activities can be found – Auckland International Airport, Ports of Auckland inland port at Wiri and SH1.
Major infrastructure work includes the soon to be completed SH1 to SH20 connection. The $210 million project involves construction of a new four-lane section of motorway to provide a connection between SH 20 at Puhinui to SH1 at Manukau. The new extension will improve access to and from Auckland International Airport and provide considerable relief to other Manukau arterial routes as well as Auckland.
In another major piece of infrastructure, Ports of Auckland is seeking government funding for a rail siding at its inland port. “If the rail shuttle services goes ahead, it will eliminate the 25 kilometre cross-city road haul and provide environmental benefits,” says Green. “Any improvement to the inland port will reinforce Wiri’s/Manukau’s claim to be a rapidly improving industrial location.”
Ingham says New Zealand Post’s property will appeal to investors and owner-occupiers. “The excellent location on Kerrs Road will make the property particularly attractive to importers and exporters as well as a large tranche of other businesses.
“There is tight land supply. Industrial development land is rapidly being exhausted. There is about 10 years supply left in the Manukau/Wiri area. At the same time there are few large buildings available and industrial occupancy is strong in an area that has a ready supply of white and blue collar workers. Vacant premises that come on to the market are leased quickly.”
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