Schools could move into commercial spaces

4:40 AM Saturday December 17, 2016 True Commercial

Dilworth bought d Hotel Du Vin in Mangatawhiri, with the intention of creating a rural campus.

Schools which have their student rolls pushed up by rapid urban intensification and rising migration could ease classroom pressure by leasing spaces in commercial buildings.

The wave of new developments in the pipeline in Auckland, and the residential construction boom triggered by the passing of the Unitary Plan, will present unique challenges for principals and education boards.

The Education Ministry has to find space for 107,000 more students in Auckland over the next three decades. Areas feeling the school space demand the most include “Grammar zone” around Newmarket and Mt Eden, Pt Chevalier, Westmere, Mt Albert, Takapuna, Albany, East Coast Bays, Howick, and Papatoetoe.

Schools face two options — go upwards or outwards. This drive to expand school buildings across New Zealand saw the value of education building consents rising strongly in the 2015 year.

Statistics NZ says education building consents were valued at $1.1 billion in 2015 — an increase of $404 million from 2014. This sector alone accounted for half of the overall increase in non-residential building consents.

“This is the first time education building consents have surpassed $1 billion in a year,” says Neil Kelly, senior manager for Statistics NZ business indicators. “The largest increases were in tertiary education — driven by science buildings at several universities. There were also large increases for school buildings, especially in greater Christchurch.

“In 2015, the regions with the highest value of building consents for education buildings were Canterbury at $420 million, Auckland at $260 million and Wellington at $178 million.”

Of the $1.1 billion total, 70 per cent was for new buildings, while 30 per cent was for refurbishment of existing buildings. The 2016 building consent figures are due out early next year — but indications are that the trend has continued over the past 12 months.

Last year, the then Finance Minister Bill English told the Wellington Chamber of Commerce that when more children turn up, the Ministry of Education simply has to build classrooms.

“There’s no choice about that,” says the current Prime Minister.

The ministry says it has options at hand from constructing two-storey blocks to replace existing single-story structures, amending school zones, or leasing floor space in nearby commercial buildings.

John Church, national commercial director for Bayleys Real Estate, says schools across New Zealand face similar pressures, and in a country where land in inner-cities is in high demand, expanding schools is easier said than done.”

“The surge in apartment developments in central Wellington and CBD fringe in Auckland have increased demand for school places there, and this is spilling into fringe areas, which are becoming more densely populated as a result of cheaper housing.”

Last year, the Ministry of Education received 26 applications for new schools, well in excess of the funding available. There are now thousands of school property projects under way — ranging from small-scale school-run capital maintenance projects to multimillion-dollar redevelopments and the construction of new schools.

Church says that one option for schools struggling to cope with expanding rolls was leasing floorspace in commercial buildings adjacent to or in immediate proximity to school premises.

Jerome Sheppard, head of the Ministry of Education’s infrastructure service group head, says for the construction of new schools, it makes more sense for the ministry to own the property, because schools need purpose-built facilities and sufficient land for playing fields. “We plan carefully for these decisions as schools are long-term investments,” he says.

“However, we do lease commercial property for a range of reasons throughout the country — usually where education or services cannot be provided from existing or standard school sites.

“These include health schools, special school transition units and Resource Teacher: Learning and Behaviour (RTLB) services.”

RTLB are funded to work with teachers and schools to find solutions to support students in years 1-10 with learning and/or behaviour difficulties. “They have a particular focus on supporting Maori and Pasifika students and children and young people moving into state care,” says Sheppard.

“We also lease commercial property for learning spaces such as in Christchurch where Ao Tawhiti is currently operating from leased spaces until its new school is built.”

An example of a college expanding into commercial premises is Dilworth School. In 2009 the school purchased Hotel Du Vin in Mangatawhiri, south of Auckland, with the intention of converting it into a rural campus following its established campuses in Epsom and Remuera.

“The site of the rural campus was deemed suitable as a third campus for the school as it had the right configuration in terms of infrastructure and buildings necessary to support a school,” says Dilworth rural campus head John Rice.

“We looked at Hotel du Vin through the eyes of an architect and saw we could use the six or seven existing buildings and renovate them accordingly, with the assistance of Argon Construction.”

Church warns that the demand for space in inner-cities is such that schools will face fierce competition for commercial space. “Although schools may take long leases of large spaces, landlords could be tempted to develop their spaces in other ways, like converting into apartments or hotels. Buying the land would be equally challenging, especially if the school was state-run, Mr Church says.

“Some schools in Auckland are having to increase their capacity significantly as a result of the intensification development of residential apartments. To meet this demand for desk space, there is no doubt that existing educational facilities will be aggressively developed and expanded vertically for quite some years to come.”

Commercial property consultant Paul Keane, of building design and analysis company RCG, agrees.

“When it comes to land and building construction (for schools), the costs are very high. And even if the Government does have the land and means to expand schools into commercial premises, its priority is the construction of houses,” he says.

“The reality is that in the future, education will be a different experience for students in one area of New Zealand to another. An overpopulated Auckland will give rise to vertical education due to lack of available land. In regional locations, where land will be available, schools will be able to accommodate the traditional playing field.”

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John Church, Bayleys.