Airport industrials are high flyers

5:00 AM Saturday May 27, 2017 Colin Taylor

The site of a new distribution centre for REM Systems Ltd under construction at 576 Oruarangi Rd, Mangere, with Sistema manufacturing facility in the background. Photo / Supplied

Industrial development activity on land near Auckland airport has shown the biggest increase in the region during the past year, according to a new survey.

Bayleys Research says the construction of industrial buildings on land it surveys near the airport has increased by 132,545sq m or 15 per cent from early 2016. 

The area surveyed by Bayleys Research encompasses parts of Airport Oaks in Mangere - located west of George Bolt Drive - where property is predominantly in private ownership; as well as land to the south, mostly owned by Auckland International Airport Ltd.

Ian Little, national manager of Bayleys Research, says all the new industrial development in the precinct over the last year has nudged the vacancy rate up from 1.4 per cent early last year to 2.7 percent.

“However, this is still at a very manageable level and less than the low overall industrial vacancy rate of 3.47 per cent across Auckland,” Little says.

Jamsheed Sidhwa, Bayleys’ industrial broker, says the substantial increase in the amount of new construction is a combination of large complexes being purpose-built for expanding businesses as well as speculative development.

“Because of the strong leasing and ownership demand for premises and low vacancy, developers are comfortable about building with little or no tenant commitment because they know the space won’t remain empty for long.”

Sidhwa says the largest contributor to the increase in industrial premises over the last year is the massive 52,000sq m Mangere manufacturing facility constructed for Sistema, the New Zealand-based manufacturer of plastic storage containers which exports to over 90 countries.

The business was acquired by US based Fortune 500 company Newell Brands for $660 million late last year. As part of the deal, Sistema founder Brendan Lindsay secured Newell’s agreement to keep manufacturing in New Zealand for the next 20 years at the new site on what was previously farm land off Oruarangi Rd.

A further 6ha of former paddocks in front of this site on Oruarangi Rd are also being developed or about to be developed, says Sidhwa. He has negotiated the first design-build development on 1.1ha of this land - a new distribution centre at 576 Oruarangi Rd for medical and surgical equipment distribution company REM Systems Limited.

Scheduled for completion late this year, the premises encompass 5311sq m of warehousing, with a stud height of 10.3m to 12.2m and a 1153sq m drive-through canopy, plus 660sq m of office.

Established in 1981 in the garage of its Auckland founders Leon and Shirley Schollum, REM now supplies hospitals, medical practices and veterinary clinics, nationwide in Australia and the South Pacific. 

True Commercial - 50-54 Richard Pearse Drive, Airport Oaks - DB Schenker bldg.jpg

The logistics building, purpose-built for DB Schenker NZ Ltd at 50-54 Richard Pearse Drive. Photo / Supplied

Sidhwa says REM’s relocation from Glen Innes to high-capability premises has been driven by multiple factors. “On the one hand are ever increasing pressures on hospital systems with surgeons needing assured access to life-saving supplies; and on the other hand, are international suppliers which expect these supplies to be managed through high-quality distribution centres in line with global best practices.”

REM will own the property and initially occupy 65-70 per cent of the space while leasing the balance short-term, says Sidhwa. The interim rental from this lease is expected to offset the additional cost to sustain future-proofed operational capability in the critical area of medical and surgical services. 

“Relocating closer to the airport was also a major consideration to enable busy medical specialists and surgeons to visit from around the country for product familiarisation and training within the same day, without losing travel time battling Auckland’s traffic.”

REM’s new building is one of two substantial developments close to Auckland airport that Sidhwa has negotiated - with Aintree Group undertaking the design and build work. The group is a private development and construction company established in 1987 by the Scarlett family which specialises in customised turn-key industrial premises.

The second development is a 7500sq m logistics building, purpose-built for DB Schenker NZ Ltd on a 12,124sq m site at 50-54 Richard Pearse Drive, Airport Oaks.  DB Schenker is owned by the German logistics giant Deutsche Bahn and describes itself as the world’s second largest transportation and logistics services provider.

DB Schenker NZ has taken a 10-year lease from April 1 this plus rights of renewal over the recently competed distribution centre. It comprises about 7000sq m of 10.8-13.7m high-stud warehousing with 428sq m of offices offering good visibility into the warehouse and the drive-through yard area underneath a massive all-weather canopy of 1334sq m.

“DB Schenker NZ is a third party logistics provider offering warehouse space and transportation services to customers with goods ranging from computer hardware to life-saving pharmaceuticals,” says Sidhwa. “These are state-of-the-art, highly specified logistics premises, built to DB Schenker’s specific global operations and security standards.”

The building comes with back-up emergency generator, high speed roller doors to minimise dust coming into the building, an extra heavy duty joint-free warehouse floor and the latest in high stud racking and tracking technology.

A range of Green initiatives include solar power which reduces the amount of electricity the building needs to draw from the main grid, significant water harvesting and energy-efficient sensor lighting.

Commercial Property - Jamsheed Sidhwa, Bayleys East Tamaki - cropped.jpg True Commercial - Ian Little, Bayleys Research.jpg

Jamsheed Sidhwa and Ian Little of Bayleys.