The Auckland halo effect

Auckland’s traditional residential and commercial boundaries have spiralled out on the back of exponential population growth and associated escalating demand for property – in all its guises.

Once less-desirable suburbs now bask in postcode envy. Strawberry fields have been picked for high-amenity self-contained residential suburbs. Gritty sawtooth sheds have morphed into smart retail precincts. Sleepy holiday settlements now have permanent letterboxes and a thriving sense of community. Office towers are now apartments. Industrial occupiers now compete for space with ecommerce fulfilment centres.

With infrastructural upgrades, technological advances, a more distributed workforce, a perpetual search for value and the appeal of commercial and industrial property as a well-performing asset class – the Auckland halo effect has meant areas at all compass points of the super city have really started to glow.

What’s more, perception of distance has condensed – the Bombay Hills and Dome Valley are no longer definitive points on a map used to determine how far you were from the lights of the city.

Build it and they will come, seems to be the narrative.

Recently, Housing Minister Megan Woods announced $1 billion of the $3.8 billion Housing Acceleration Fund has been earmarked for a contestable housing infrastructure fund, available for development projects that provide drinking water, wastewater, sewage, roading, and flood management to enable new houses to be built.

Where will these new developments be? What commercial and industrial opportunities will follow?

Total Property looks at several areas that are benefiting from the Auckland halo effect and finds that change is the only constant.

New nodes

Across the bridge, Daniel Henderson, general manager Bayleys North Shore Commercial, said the North Shore is bulging at the seams.

“Population growth, historically-low vacancy rates, and next-to-no available stock on the market means investors or occupiers with very specific requirements are thwarted by the existing built environment.

“There’s very little to work with and as large-scale occupiers are looking for efficiencies from well-located integrated facilities, we’ve been short on options – and finding bigger buildings has been a mission.

“Hence, the boom we’ve seen out west and further north.”

Henderson said a new economic triangle has been created with the North Shore, West Auckland and Silverdale at the points.

“Around 30km north of Auckland city, Silverdale has been redefined,” he said.

“Significant residential and commercial growth has pushed the settlement north and south of its traditional village core and we can’t keep up with demand for commercial and industrial space.

“And if you’re looking for a bargain because its ‘out of Auckland’, you’ll need to shift your thinking.”

Silverdale now has large format retail, specialist shops, office stock and new industrial precincts – like one in Foundry Road, and The Industry in Peters Way, where 74 freehold strata-titled units are being snapped up off the plans.

“We’re seeing rents increasing and vacancy levels dropping away before our eyes – it’s a bouncing ball that is being followed Auckland-wide.”

With the nearby WFH Properties Millwater master-planned community well-entrenched now with thousands of new homes at various stages of development, the next cab off the rank for that development entity is Milldale to the west of State Highway 1 which will connect to Millwater by bridge.

“All these people will need services, amenities, places to work and shop,” said Henderson.

“The wider Silverdale-Wainui-Dairy Flat area will become one of Auckland’s key growth nodes in coming years as the hunt for commercial and industrial opportunities continues.

“There’s not a lot of suitably-zoned land right now, but that will change as it’s the next logical offshoot, and, as with other areas around the country, getting the infrastructure right, will be key.”

Meanwhile in West Auckland, Kumeu has been identified by Auckland Council as part of the solution to the city’s growth challenge with the now-rural community poised to become a sizeable fringe suburb of Auckland. There is a new town centre commercial hub and extensive residential development, and investment dollars are circling.

Kumeu is shrugging off its rural label, with Kumeu Film Studios operating from a 27-hectare site and offering extensive stage, workshop and manufacturing spaces, production offices, 12 hectares of forest, and two water tanks for filming purposes.

Roading unlocks potential

The Puhoi-to-Warkworth motorway extension and the Matakana Link Road due for completion next year, will further improve connections with Auckland and enhance the commercial and industrial property opportunities in the wider Warkworth-Matakana-Snells Beach area.

Warkworth had 5,600 residents at the 2018 census, but Auckland Council population growth forecasts for the greater Warkworth/Mahurangi Peninsula and surrounding settlements, including Matakana, estimate the region will sustain 25,000 permanent residents by 2030.

Chris Blair leads the commercial and industrial business for Bayleys across this area and said these are interesting times.

“It’s a hotbed of activity right now with a real appetite for investment across all the property sectors.

“It’s a somewhat fragmented marketplace however, with much of the existing stock being tightly held by individuals over a long period of time and new players sweeping in wanting to get a foothold on the back of residential growth.

“We’re also seeing movement of investment across asset classes with traditional residential investors now wanting to transition into commercial and industrial.”

Blair said Warkworth’s new motorway links will amplify the appeal of the area.

“Matakana Link Road is a 1.35km link between State Highway 1 and Matakana Road and will provide an alternative route to the frequently-congested Hill Street intersection for traffic heading to Leigh, Omaha, Sandspit and Snells Beach.

“Every point a motorway touches creates opportunity and there will be a knock-on effect on supply and demand,” he said.

“Land supply, however, is excruciatingly tight with only scattered pockets of identified developable land and nothing of any real scale, so pressure is building up in the system.”

Blair said COVID-19 and its aftermath has pushed people’s buttons and fast-tracked plans to relocate and pivot direction in this part of the country.

“Some of these areas have been undervalued and under-recognised but are quickly gaining ground in the wake of a widespread shortage of housing in the greater Auckland catchment.

“Former holiday destinations are now being viewed through a permanent residence lens, retirement village operators are scouting for sites with scale and that brings inevitable challenges around the provision of amenities and services.”

In the coastal settlement of Mangawhai, just over an hour north of Auckland, the gap between the traditional “heads” and “village” is about to be transformed.

Mangawhai Central is a new 130-hectare master-planned precinct that will offer scale and significant opportunity across the market.

Ultimately, it is intended that the Mangawhai Central precinct will encompass a town square, retirement village, six buildings to house boutique retail stores, food and beverage outlets, supermarket, medically-aligned services, a service zone (light industrial), and childcare facilities – along with a range of residential development sites.

Blair said the increasing popularity of the Mangawhai area for both permanent and holiday residences supports this multi-faceted precinct development.

“The early upfront commitment from New World for a large format circa-2,500sqm supermarket gives a clear indication of the potential that the retail component, to be known as Main Street, has for retail and hospitality businesses.

“Stage 1 of Main Street is now fully-leased, and Stage 2 is leasing now, with expected completion in the first quarter of 2022.”

While there are still some issues to be resolved before some of the residential development can proceed further, a private plan change has been approved by Kaipara District Council to allow Mangawhai Central Limited to build up to 1,000 new homes in Mangawhai.

Download full article (PDF)   

Subscribe to receive the latest commercial news and insights from Bayleys Total Property