Business Land Assessment - Christchurchresources.ccc.govt.nz/files/TheCouncil/policies... · Colliers International Valuation estimates that the vacant industrial land takeup in the

Business Land Assessment

Proposed Plan ChangeChristchurch International AirportChristchurch

Christchurch International Airport LimitedPO Box 14001Christchurch 8544Attention: Rhys Boswell

Date: 10 July 2013 Ref: 8807/GS

Contents

1.0 SCOPE AND METHODOLOGY .................................................................................... 11.1 INSTRUCTIONS ............................................................................................................11.2 SCOPE .......................................................................................................................... 11.3 LAND SUPPLY ..............................................................................................................1

2.0 INDUSTRIAL LAND MARKET ....................................................................................... 22.1 HISTORIC MARKET ......................................................................................................22.2 CURRENT SUPPLY ......................................................................................................52.3 FUTURE SUPPLY .........................................................................................................72.4 PROPOSED BUSINESS LAND ................................................................................... 102.5 RESOURCE MANAGEMENT ...................................................................................... 122.6 SUMMARY................................................................................................................... 17

3.0 COMMERCIAL LAND MARKET.................................................................................. 213.1 SUBURBAN COMMERCIAL MARKET OVERVIEW.................................................... 213.2 RETAIL LAND SUPPLY............................................................................................... 22

Memorial Avenue Land EvidenceRef: Memorial Ave Land Evidence gslm 8807 Jul13 1Preparation Date: 15 July 2013

1.0 SCOPE AND METHODOLOGY

1.1 INSTRUCTIONS

Colliers International Valuation was instructed by Rhys Boswell of Christchurch International AirportLimited to complete research on the Christchurch business land market and provide expert evidence ona range of valuation issues in relation to the Special Purpose (Airport) Zone (“SPAZ”).

1.2 SCOPE

Our research focussed on the following aspects:

Industrial market overview Industrial land supply and demand Future industrial land supply Geographic land values Suburban commercial land market

1.3 LAND SUPPLY

In July 2013, Colliers International Valuation inspected all Christchurch suburban industrial areastogether with the inner city and identified current vacant land in order to quantify current and potentialsupply.

We also reviewed the Christchurch City Council Vacant Land Register dated 2012 which provides asummary of the Council records of vacant industrial land in Christchurch City.

We have also reviewed the recently released draft Land Use Recovery Plan which identifies rural landrecommended to be rezoned business.


2.0 INDUSTRIAL LAND MARKET

2.1 HISTORIC MARKET

The Christchurch City Council maintains a Vacant Land Register (“VLR”) which monitors the supply ofvacant industrial related business land in Christchurch.

The following is a summary of the historic supply and takeup of vacant business land in ChristchurchCity from 1992 through to 2012. The VLR in 2007 included for the first time the Special Purpose(Airport) Zone (“SPAZ”) comprising 153.2 hectares.

Christchurch City VLR - Land SummaryDateJune

Total Areaha

Takeupha

1992 625.78 10.971993 610.99 19.281994 574.79 19.561995 541.79 33.841996 543.79 21.311997 530.17 15.651998 523.43 21.121999 510.92 36.412000 462.98 30.712001 435.32 19.602002 417.38 17.472003 389.11 29.102004 372.02 28.552005 353.51 30.582006 362.17 25.022007 461.63 33.572008 442.18 14.032009 455.22 14.832010 477.42 6.062011 463.30 9.332012 496.95 7.92


The following graph tracks the supply of vacant business land in Christchurch City identified by the VLRfrom 1992 through to 2012. The SPAZ was included in statistics from 2007 onwards. The graph clearlyshows a significant increase in supply in 2007 which was a result of incorporation of the SPAZ land atthat date.

There was a steady decline in land recorded by the VLR decreasing from 625.78 hectares in June 1992to 353.51 hectares in June 2005, a fall of 43.51% during the 14 year period. Throughout that 14 yearperiod the statistics took into account not only land takeup but also land rezoned for business purposes.Since 2005 vacant land supply has increased to 496.95 hectares. This period included the addition ofthe SPAZ and rezoning of land at Portlink Industrial Park, Woolston.


The following graph tracks the trend in takeup of vacant business land as recorded in the VLR as atJune each year up until 2012.

The previous graph illustrates an erratic pattern of land takeup with peaks in 1995, 1999, 2000 and the2003 – 2007 period. These peaks coincided with buoyant industrial property market cycles when therewere surges in industrial related building development, including bulk retail and office activitiesdeveloped on Business 4 land. The average takeup of business land during the previous ten years until2012 was 19.9 hectares per annum.

The relatively low and erratic takeup from 2008 through to 2010 was a result of the Global FinancialCrisis which had a significant impact on the industrial property market development sector.

The period from 2010 through to 2012 resulted in low industrial business land takeup which was a directresult of the Christchurch Earthquakes when there was a period of uncertainty in terms of market andland conditions.The average VLR takeup for the five year period from 2008 to 2012 is just 10.4 hectares per annum.

The average VLR takeup throughout the 10 year period from 1993 to 2002 was 23.5 hectares perannum.

Colliers International Valuation estimates that the vacant industrial land takeup in the period since June2012 is 38.5 hectares which is illustrated in the graph above. This estimated takeup takes into accountdevelopments which have either been commenced or are in the pipeline.

At peak takeup periods up to 35 hectares per annum was required, although it must be noted land atRolleston was not available then.

2013 - Colliers Assessment

0

5

10

15

20

25

30

35

40

45

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Indu

stra

il La

nd (H

a)

Year

Take - up of Vacant Industrial Land 1992 - 2012


The following is a summary of the June 2012 VLR by zone:

Christchurch City VLR 2013 – Zone SummaryZone Area

HaProportion

%

B3 4.6 0.94%B3B 3.6 0.72%B4 103.4 20.80%B4P 6.6 1.32%B4T 0.8 0.15%B5 134.8 27.13%B6 54.6 10.99%B7 44.9 9.03%SP (Airport) 143.7 28.92%

Total 497.0 100.00%

2.2 CURRENT SUPPLY

Colliers International Valuation completed a vacant land survey of industrial business land throughoutChristchurch in July 2013. The Colliers International Vacant Land Survey (“CIVLS”) involved a physicalinspection of all suburban and inner city industrial business land in Christchurch. The CIVLS identified atotal land area of 588.3 hectares which is 91.3 hectares greater than the VLR total area of 497.0hectares as at 2012. Historically there has always been a difference of opinion on survey methodologybetween Colliers and the Christchurch City Council.

The following is a summary of the CIVLS analysed by zone:

CIVLS 2013 – Zone SummaryZone Area

HaProportion

%

B3 6.2 1.06%B3B 2.2 0.37%B4 66.2 11.25%B4P 4.5 0.76%B4T 0.5 0.08%B5 157.6 26.78%B6 61.4 10.43%B7 20.2 3.43%B8 101.3 17.22%BRP 1.2 0.21%CCMU 12.9 2.20%SP (Rail) 1.4 0.24%SP (Airport) 152.8 25.97%

Total 588.3 100.00%


The following is a summary of the CIVLS analysed on a geographic basis:

A significant proportion of the area in the north quadrant of the city comprises the SPAZ land, 152.8hectares out of a total of 256.8 hectares. There is a large area of vacant land in the Business 6 (RuralIndustrial) zone either in Johns Road / McLeans Island Road just to the north east of ChristchurchInternational Airport and at Chaneys industrial area, adjacent to the Waimakariri River, where there is intotal 61.4 hectares. However, the absence of services (sewer and water) provides some constraints tothe development of these Business 6 zoned areas.

We have completed an analysis on the VLR and the CIVLS in order to reconcile differences betweenthe two surveys. The following is a comparison table:

Vacant Land Survey Analysis ComparisonZone CCC VLR

haCIVLS

haDifference

ha

B3 4.6 6.2 1.6B3V 3.6 2.2 -1.4B4 103.4 66.2 -37.24P 6.6 4.5 -2.1B4T 0.8 0.5 -0.3B5 134.8 157.6 22.8B6 54.6 61.4 6.8B7 44.9 20.2 -24.7B8 - 101.3 101.3BRP - 1.2 1.2CCMU - 12.9 12.9SP (Rail) - 1.4 1.4SP (Airport) 143.7 152.8 9.1

Total 497.0 588.3 91.4

The Christchurch City Council VLR was completed in June 2012 and the Colliers International VacantLand Survey was completed in July 2013. During this period there has been a change in some landuse.

CVLS – GeographicLocation Area

HaProportion

%

East 42.5 7.22%Inner 24.3 4.13%North 256.8 43.64%South West 264.7 45.00%

Total 588.3 100.00%


The following is a summary of the major discrepancies which in most cases can be easily explained.

Within the B4 zone the differential of 37.2 hectares is mostly explained by the rezoning of 35.5 hectaresof B4 and B5 land at Islington Park to B8 which is not included within the VLR.

The differential of 22.8 hectares in the B5 zone is mostly explained by the rezoning of 33.5 hectares inSir James Wattie Drive at Hornby owned by Calder Stewart from Rural to Business 5.

The difference in the B7 zone is likely to be a result of land now taken for motorway purposes throughthis area of Awatea, just south west of Wigram.

The VLR also excludes land within the Central City Mixed Use zone (“CCMU”), the B8 zone and alsothe Special Purpose (Rail) zone.

Once these differences are taken into account, the two surveys are reasonably consistent.

In the south west sector of the city there has been a significant increase in the area of vacant industrialland as a result of rezoning. In our previous survey in 2009, 121.2 hectares was identified, compared to264.7 hectares in June 2013.

In addition to the above Christchurch City analysis we have also reviewed the Rolleston industrial landmarket where 78.3 hectares zoned Business 2 has been identified as vacant, most of which is locatedin or adjacent to the Izone Southern Business Hub.

Excluded from the CIVLS is land which is clearly not available for development including land that iscurrently held for future road construction and land that is currently a pit and requires significant filling.

2.3 FUTURE SUPPLY

The Greater Christchurch Urban Development Strategy (“UDS”) sets out the settlement pattern for thefuture development of Greater Christchurch for the 35 year term from 2007 until 2041.

The Regional Policy Statement (“RPS”) provides an overview of the resource management issues ofCanterbury and sets out how the environment is to be managed in an integrated and sustainable way.

Originally Proposed Change No.1 (“PC1”), since replaced with Chapter 12A, to the RPS set out the landuse distribution, household densities for various areas and other key components for consolidated andintegrated urban development in Canterbury.

PC1, and the Officer’s Recommendations defined greenfields urban growth areas within the MunicipalUrban Limit (“MUL”).

PC1 to the Canterbury RPS was revoked on 17 October 2011 and replaced by Chapter 12A.


Chapter 12A was based on PC1 but was updated as a result of the Canterbury Earthquakes. Chapter12A provided direction for future growth within greater Christchurch by setting out land use distribution,in particular identifying areas available for urban development including specifying residential densitiestogether with provision for business. Although Chapter 12A promoted intensification of land use withinexisting urban areas it also identified appropriate areas for greenfield development to accommodateprojected growth and population relocation.

Chapter 12A confirmed new 50 dBA noise contour lines in relation to Christchurch International Airportand proposed that residential subdivision development shall not be permitted inside the 50 dBA noisecontour, with the exception of Kaiapoi.

Chapter 12A identified the areas situated inside the 50 dBA noise contour and certain low lying areaswith water catchment issues and categorised these as “Policy 15 (f) Area” or “North West Review Area”.

Environment Canterbury working in partnership with the Canterbury Earthquake Recovery Authority(“CERA”), the Christchurch City Council, Selwyn District Council, Waimakariri District Council, NgaiTahu and the NZ Transport Agency released a draft of a Land Use Recovery Plan (“LURP”) on 6 July2013. The LURP was open for submissions until 2 August 2013.

The LURP replaced Chapter 12A and focuses on the metropolitan urban areas and towns stretchingfrom Lincoln and Rolleston in the south to Rangiora and Woodend in the north, including ChristchurchCity.

The LURP takes the approach that urban development in greater Christchurch between 2013 and 2028shall only occur within an identified urban boundary, and;

Reinforces the protection of the Christchurch International Airport by prohibiting any noisesensitive development within the 50 dBA LDN air noise contour;

Directs that commercial development be limited to existing zoned land and that it be locatedpredominantly in identified Key Activity Areas such as Riccarton, Belfast and Eastgate;

Puts in place a range of policies to avoid and minimise the risks associated with naturalhazards.

The LURP identified land suitable for rezoning to industrial business use comprising 612 hectares withinChristchurch and Rolleston. The above total excludes small areas identified at Woodend, Rangiora andLincoln.

We have excluded those areas identified in the LURP which have already been rezoned business in theChristchurch City and Selwyn District plans.

We have completed our own analysis of the LURP plans and calculate the total area identified in theLURP is 624.37 hectares, slightly greater than the areas identified in the LURP document.


The following is a summary of the LURP business land proposed for rezoning:

LURP Land SummaryIdentification Location LURP Area

haColliers Area

ha

B5 Belfast 95 99.37B6, B7, B8 & B9 North West 119 133.30B10 Hornby West – Calder Stewart 194 196.50B11 Hornby – Main South Road 23 14.33B12 Hornby – South 62 20.47B13 Templeton 5 5.01B14 & B15 Rolleston 114 155.39

Total 612 624.37

There are individual differences between the area identified in the LURP and the Colliers identifiedLURP areas however in total there is only a difference of 12.37 hectares which is relatively minor in thecontext of the overall total area.

The draft LURP document states the following in relation to business land:

“What business needs will be over the lifetime of the Land Use Recovery Plan isdifficult to predict. The earthquakes have added to the uncertainty about how differentsegments of the regional economy will change.

Statistics NZ business demographics data together with modelled growth by industrysectors undertaken for Canterbury Development Corporation provides some insightinto structural changes to the economy. The rebuild activity will lead to additionalgrowth over and above these underlying changes, especially in the construction andmanufacturing sectors which generally require larger sites for their activities.

Between 2004 and 2011 take-up rates for industrial land within Christchurch Cityaveraged around 20 hectares per year. Uptake in Selwyn District over the last fiveyears ranged from 12 to 15 hectares a year, while in Waimakariri District it was about1 hectare per year (due in part to limited supply). Notably, however, industrial landuptake in Christchurch in the year to June 2012 was only 7.9 hectares.

If average uptake rates were used to predict future demand, around 540 hectares ofindustrial land would need to be identified for the period to 2028 (Christchurch City300 ha, Selwyn District 225 ha and Waimakariri District 15 ha).”

The relatively high vacant industrial land takeup in Selwyn District over the last five years of between 12and 15 hectares per annum is a result of the rapid expansion at Izone Southern Business Hub whereland prices are cheaper than in Christchurch City.


2.4 PROPOSED BUSINESS LAND

The following is a summary of the identified LURP areas which have not as yet been rezoned:

Area B5 – BelfastThis land is located at the northern extent of Christchurch as defined by the LURP, inside theintersection of Main North Road (SH1) to the west and Marshland Road to the east – both majorarterials leading north out of Christchurch. It is also bisected by the South Island Main Trunk railway line(“SIMT”) offering rail freight and passenger transport options into the future.

Currently B5 has some industrial activities located to the south along Factory Road and Station Road,and it is likely the land proposed for release would also be taken up for industrial use. There is someresidential activity to the west along Main North Road and lifestyle blocks east of Marshland Road.Significant residential land release is proposed further south along John’s Road.

The B5 area in the draft LURP has been identified as containing 95.0 hectares whereas Colliers hasidentified this area at 99.37 hectares.

Areas B6, B7, B8 & B9 – North West AreaThese four blocks of land were located in the large Special Treatment Area 1 (“STA1”) in PC1 and morerecently “Policy 15 (f) Area” or “North West Review Area” (“NWRA”) under Chapter 12A.

These areas relate to land located east of Christchurch International Airport which is located inside the50 dBA noise contour and located adjacent to either Johns Road or Russley Road on the north westernedge of Christchurch City.

The following is a summary of each individual parcel:

Area B6This land comprises 15.52 hectares located on the southern side of Johns Road between Harewoodand Sawyers Arms Roads and abutting Waimakariri Road. This land was previously a gravel pit isowned by the Christchurch City Council.

Area B7This large block of land comprising 52.54 hectares is located west of Russley Road and north ofWairakei Road and extends through from Wooldridge Road to Russley Road. This land adjoins theBurnside business district.

The eastern component is subject to Private Plan Change 73 to rezone from Rural 5 to a mix ofBusiness 4 and 4T. This land which extends between Wooldridge and Stanleys Roads, just north ofWairakei Road is owned by the Tait Foundation which has commenced development of the Tait ParkCampus, a technology based business park.


Area B8B8 comprises a 24.3 hectare property located in a prominent position at the intersection of MemorialAvenue and Russley Road at the gateway to Christchurch International Airport. We understand theowner of the property, Memorial Avenue Investments Limited has previously submitted a Private PlanChange to rezone the land to allow mixed business development including retail, travellers’accommodation, offices and commercial and community activities.

Area B9The B9 area comprises 40.94 hectares of rural land with significant frontage to Russley Road and morelimited frontage to Hawthorndon Road, just east of Christchurch International Airport. The landcomprises a mix of rural lifestyle properties and rural activities.

Areas B10, 11 & 12 – HornbyB10, 11 & 12 is also a peripheral location, at the south west corner of the City on the approach toHornby.

B10, 11 & 12 is the largest grouping of Greenfield business parcels proposed for release at 231.30hectares which represents 49.3% of business land to be released in Christchurch City. It will build onthe already significant industrial corridor stretching westwards from the city along Blenheim Road andthe South Island Main Trunk (“SIMT”) railway to Hornby. The land that is identified predominantly hasfrontage to Main South Road (SH1) and Shands Road.

Hornby accommodates all of the major logistics companies who typically occupy large warehousefacilities and is the preferred industrial transport related suburb of Christchurch due to the strategiclocation adjacent to SH.1 and the SIMT railway.

The B10, 11 & 12 land exhibits similar qualities to B5 – a large area; a peripheral Greenfield locationwith greatest potential for industrial use; good road access and potential connection to the rail network.

The following is a summary of each individual block:

Area B10This area comprises 196.5 hectares and is predominantly owned by Calder Stewart Industries Limitedand is located at the intersection of Shands and Marshs Road with frontage also to Main South Road(SH.1). Another significant owner in this block is Heinz Watties Limited.

Calder Stewart Limited has land use consent for the first stage of a subdivision and construction of asubstantial distribution warehouse for Foodstuffs. This block forms part of Calder Stewart’s HornbyQuadrant industrial park which spans both sides of Shands Road.

Area B11B11 comprises an area of 14.33 hectares located on the northern side of Foremans Road and borderedby the South Island Main Trunk Railway along the northern side boundary.

Area B12B12 comprises 20.47 hectares located on the north western side of Springs Road, just to the south ofthe existing Business 5 zone.


Area B13 – TempletonLocated on the southern edge of the small Templeton township is an area comprising 5.01 hectaressituated to the rear of the existing Cookie Time property and also land on the western side of TrentsRoad.

Areas B14 & B15 - RollestonIn addition to the 468.98 hectares identified by LURP in Christchurch City as suitable for rezoning fromrural to business, there is a further 155.39 hectares identified at Rolleston in Selwyn District principallyadjoining the Izone Southern Business Hub.

SummaryThe following is a summary of the existing vacant business land in Christchurch City and Selwyn Districtidentified by the CIVLS and the additional land identified in the LURP in both Christchurch City andSelwyn District:

CIVLS & Chapter 12A

LocationAreaha

Christchurch City – Existing 435.5Special Purpose (Airport) - Existing 152.8Selwyn – Rolleston Existing 78.3LURP – Christchurch City 469.0LURP – Selwyn District 155.4

Total 1,291.0

2.5 RESOURCE MANAGEMENT

The following is a summary of all suburban business zones in Christchurch City. The Business 1, 2 and2P zones have a strong retail focus. The Business 3 – 8 zones generally have a strong industrial focusalthough the Business 3B and 4 zones to a certain degree along with the B4T zones have a strongcommercial office focus. The Business Retail Park zone has a strong bulk retail focus.

Business 1 ZoneThe Business 1 (Local Centre – District Centre Fringe) zone areas are dominated by small scale retailshops and service activities, and many are characterised by “strip” development of shops immediatelyadjoining road frontages. The Business 1 zone’s purpose is to provide for local opportunities foremployment, community activities and conventional (often pedestrian) access to goods and services.The zone also includes those fringe parts of district centres which adjoin a Business 2 zone andgenerally comprise the older component of strip frontage development along major roads.

Business 2 ZoneThe Business 2 (District Centre Core) zone has three main purposes:

a. Firstly, it provides for building development of a significant scale and intensity, appropriate to thefunction of larger district centres and to the amenities of any living environment adjoining thezone.


b. Secondly, the zone identifies the core of business activity within a district centre, particularly withregard to retailing. Many of these district centres also contain both a Business 2 core and anadjacent (usually older) Business 1 zone component.

c. Thirdly, these centres usually contain important community facilities, whether in public or privateownership.

Business 2P ZoneThe Business 2P (District Centre - Parking) zone is a specialist zone which applies to suburban centresat Linwood, Merivale, Shirley, New Brighton, Fendalton, Wairakei and Barrington, to secure parkingprovision and to act as a buffer for residential areas.

Business RPThe Business RP (Retail Park) zone recognises the market trend towards large format retail and tradesupply outlets that has accelerated since the 1990’s. The zone and associated rules recognise thistrend and provide for large format retail centres that are predominately accessed by private motorvehicles. Retail activities that sustain the central city and district centres are discouraged from migratingto such areas by means of a minimum shop tenancy size threshold. In this way, the large format trendcan be enabled in the BRP zone.

Business 3 ZoneThe Business 3 (Inner Industrial) zone covers the older industrial areas near the central city which aredominated by light industry and service industries and includes a range of long established industriesoften on small sites. This zone relates to the inner industrial areas of Addington, Sydenham, Walthamand Phillipstown. The Business 3 zone allows a wide range of light industrial activities although anyretail and office development is subject to limitations. The original Business 3 and B3B zone land in theinner city has been rezoned Central City Mixed Use in the proposed Central City Plan.

Business 3B ZoneThe purpose of the Business 3B (Inner City Industrial Buffer) zone is to provide a transitional buffer areabetween the mixed industrial activity areas in the inner city (B3) and the medium density inner cityhousing areas. Buildings in this zone are typified by small scale light manufacturing, service and repairindustry, warehousing and various community activities such as places of assembly. Offices are notspecifically restricted as they are not considered to be incompatible with environmental effectsanticipated in this zone. This zone now refers to land outside of the inner city.

Business 4 ZoneThe Business 4 (Suburban Industrial) zone includes a number of light industrial and servicing areas inthe city generally located within or adjoining suburban living areas. The zone also includes lightindustrial areas intended to serve as buffer zones between living zones and the Business 5 zone, andservicing areas adjoining some large suburban commercial centres. The purpose of the zone is toprovide for light industry, warehousing and service industries, and some commercial activities such asoffices. Some retailing is provided for in these areas with the emphasis on retail activities of a natureand scale that do not lead to significant adverse effects on the function of the central city and districtcentres.


Retail activity is subject to restrictions and scale in order to prevent the adverse effects of dispersal anddilution of this activity outside of the Business 1 and 2 zones, and the Central City zone. Officedevelopment is not considered to be incompatible with the environmental effects anticipated in thiszone.

Business 4PThe Business 4P (Suburban Industrial – Produce Park) zone relates to an area of 42 hectares onHalswell Junction Road which was designed as a “Produce Park”. Performance standards requiredevelopment to be low density with significant emphasis on open space and landscape treatment.Retail activities have been restricted to avoid reverse sensitivity effects between incompatible activities.

Business 4TThe Business 4T (Suburban Industrial – Technology Park) zone relates to land in the Russley area inthe north west of the city adjacent to Sir William Pickering Drive which has been developed as aTechnology Park. This business park was established with strict performance standards requiringdevelopment to a low density and significant emphasis on open space and landscape treatment. TheBusiness 4T zone envisages similar activities to the B4 zone including offices.

The Tait Foundation together with a neighbour is close to achieving rezoning of 10.3 hectares fromRural 5 to B4T, between Wooldridge and Stanleys Road.

Business 5The Business 5 (General Industrial) zone includes large areas in the Hornby, Middleton, Sockburn,Woolston and Bromley areas, and smaller areas at Belfast and Papanui. It is characterised by a widerange of both light and heavy industry, processing and warehousing. A lower level of environmentaloutcomes is anticipated within parts of the zone in reflection of its location and character. In most (butnot all) locations, the zone is buffered from living zones by B4 zones.

Business 6The Business 6 (Rural Industrial) zone applies to two large areas of land. The first is the Chaneysindustrial area located on the Main North Road, bounded by the Northern Motorway to the west, and theSouth Island Main Trunk railway to the east. It is contained to the north by the Waimakariri River. Thearea includes large amounts of as yet undeveloped land, and development is constrained at present bythe lack of water supply, and provision for sewage disposal. The second area incorporates existing ruralindustrial sites located to the west of Johns Road, and north of McLeans Island Road, and ChristchurchInternational Airport. Historically, the area has been occupied by industries associated with timberstorage, milling and processing, and also includes cement products manufacturing and transport andconstruction yards. It currently has similar servicing constraints to the Chaneys area. Because of itsrural location, the zone is considered suitable for space extensive “dry” industry, which often would beconstrained in a normal suburban industrial setting and incompatible with surrounding residentialactivities.


Business 7The Business 7 (Wilmers Road) zone comprises 44 hectares located on the eastern side of the Hornbyindustrial area and to the north of Halswell Junction Road. Historically parts of the area have been usedfor gravel extraction and waste disposal. The area is characteristic of a rural industrial area, with thepotential for further development for business and industrial purposes. However, further intensificationof land uses and subdivision in this zone is considered appropriate for space intensive, high effects“dry” industries which often would be constrained in a normal suburban industrial setting and whichwould be incompatible with residential activities.

Business 8The Business 8 (Islington Park) zone is a large new business zone in the south west of the Citygenerally bounded by Pound Road, Waterloo Road and the suburb of Islington, and is based aroundthe old Islington Freezing Works complex part of which previously had a Business 5 zoning. The zoneprovisions are tailored to ensure that the underlying Ground Water Recharge Zone is adequatelyprotected from potential contamination and are considerably more restrictive than the earlier Business 5provisions that covered a third of the zone. These measures include restrictions of categories ofhazardous substances used or stored in the Business 8 zone, low threshold quantity limits for otherhazardous substances which could have potential adverse effects on groundwater, and a restriction onboth the manufacturing and underground storage of hazardous materials.

The zone will enable to regeneration of the existing large “brownfield” industrial complex based on theold freezing works, and with possibly retention of good quality existing buildings that are capable ofadaptive reuse, and the removal of obsolete structures that comprise the majority of the existingcomplex, and the replacement with modern buildings and landscaping. The zone will also facilitate theremediation and capping of areas contaminated by the old freezing works activity. The site is suitablefor business activities in terms of its location in relation to transport links to the north, west and south,along with close proximity to the airport and the rail corridor. Environmental results anticipated include arange of “dry” light industrial, commercial, transport, business, and warehousing activities withconvenient access to major transport routes and Christchurch International Airport.

Central City Mixed UseThe Central City Mixed Use (“CCMU”) zone is a new zone introduced by the CERA appointedChristchurch Central Development Unit’s “Blueprint” for the redevelopment of central Christchurch. Thisnew zone wraps around the central city Core and Frame zones.

In the Central City Mixed Use Zone a number of land uses are considered to be complementary andcompatible with each other, posing a reduced risk of conflict in the emergence of sensitivity effects. Inaddition, the particular design characteristics and requirements associated with a number of land useuses lends themselves to creating opportunities to achieve built form outcomes that are interesting andvibrant. Land uses anticipated to establish in the mixed use zone include:

Residential activities, including student accommodation Commercial offices Commercial service activities Education, health and research facilities Community facilities


Travellers' accommodation Places of entertainment Limited retailing (size, scale and use) A new supermarket in the Manchester, Salisbury and Madras Street block having a maximum

GLFA of 4,000 square metres Light manufacturing activities having low nuisance impact on sensitive activities such as

residential activities

Land use which is not anticipated to establish in the mixed use zone include:

Heavy or noxious industrial activities Small scale (boutique, comparison) retail activity and large format retailing

Essentially the new mixed use zone allows a wider range of commercial activity type in this localityincluding commercial offices as of right which was not the case previously. The Central City Plan placesheight limits on new development with a maximum height of 17 metres.

Special Purpose (Airport)The Special Purpose (Airport) zone contains facilities associated with the operations of ChristchurchInternational Airport including runways, airport buildings and surrounding land used for airport supportservices.

The intention is that any development within the airport zone will be clearly associated with theoperations and associated functions of the airport. Business development which has little or norelationship with the airport is provided for elsewhere in the city to ensure that the availability of landwithin the airport zone is not unduly restricted for airport uses.

The Christchurch City Plan identifies that any activity within the airport zone shall be confined to -

(a) Commercial, recreational, or military aviation and ancillary maintenance and supportfacilities, navigation, meteorological and aircraft operational facilities;

(b) Support facilities ancillary to the operation of the airport which derive the majority of customfrom persons working in the Airport Zone, or from passengers using the airport;

(c) Tourist, demonstration and educational facilities directly associated with the needs ofpassengers using the airport, or with aviation activities at the airport, or with the Antarcticprogramme;

(d) Dispatch and receipt of freight and ancillary facilities.

(e) Retailing ancillary to the operation of the Airport which derives the majority of custom frompersons working in the Airport Zone, or from passengers using the Airport.


2.6 SUMMARY

Land SupplyThe Christchurch City Council VLR up until 2005 tracked a continual decline in the supply of vacantindustrial business land in Christchurch. This constraint on supply was considered to be one of thecontributors to escalating industrial land prices across most suburbs up until that time.

The CIVLS survey identified 588.3 hectares of existing industrial land although a proportion of this is notideally located or suited for immediate development.

The LURP has identified a significant potential increase in the supply of industrial business landbetween Christchurch and Rolleston to cater for demand over the next 15 years. We have identifiedland which has not been rezoned represents an increase of 469.0 hectares or 79.7% in ChristchurchCity alone over and above the existing vacant land supply identified by the CIVLS of 588.3 hectares.

Adopting the historic VLR takeup average over the last ten years of approximately 20.0 hectares perannum, the existing vacant land in Christchurch City is sufficient to provide for 29 years supply, andincluding the LURP area, approximately 53 years supply.

An average takeup of 20.0 hectares per annum is conservative and is derived from a period of upheavalinitially caused by the GFC and more recently the earthquakes.

As one would expect following a period of low industrial business land takeup during recent years thereis pent up demand and we have identified 38.5 hectares throughout Christchurch City which was vacantin June 2012 and has been or is currently being developed. This level of takeup is likely to bemaintained in the short to medium term as the rebuild and Christchurch economy gathers pace.

Clearly there is and is going to be a more than ample supply of industrial related business land inChristchurch City and the nearest major market at Rolleston in Selwyn District within the life of the CityPlan.

CIAL Business LandThe CIAL land comprising 154.3 hectares is zoned Special Purpose (Airport) which is restrictive interms of the activities permitted and essentially limits development to airport related uses.

In addition to the existing activity rules for the SPAZ zone the following are proposed to be added to theFreight-Service Precinct:

(e) Food and beverage outlets;(f) Fuel and service stations;(g) Vehicle rental and repair, vehicle parking and storage;(e) Automotive and marine suppliers;(f) Industrial activity;(g) Bus depots and transport centres.


In the light of the modern evolution of international airports, there is consideration as to whether a widerrange of business activities should be provided for within the SPAZ, such as those provided in the B4T,B4 and to a lesser extent B5 zones.

The CIAL land is already serviced by existing infrastructure and constitutes 26.0% of the existing vacantbusiness land in Christchurch prior to consideration of the land identified in the LURP as suitable forrezoning. This is a significant proportion of the vacant land supply which is constrained in terms ofavailability by the existing SPAZ rules.

Relaxation of the rules for development and permitted activities in the SPAZ would allow an increase inthe range of activities, more certainty and a wider market appeal.

We are of the opinion that historically the SPAZ land has been relatively slow to be developed becauseof the limited range of activities permitted, although a contributing factor has been the land owner’spreference to retain ownership. It is difficult to quantify what effect that CIAL’s land tenure preferencehas had on the rate of development although we consider it to be at the lower end of the scale incomparison to the effect that the restriction on permitted activities has had.

Calder Stewart Industries Limited who also owns the land within the SPAZ area adjacent to AvonheadRoad has a more flexible policy in terms of ownership and sells completed development to the openmarket on a freehold basis. The Calder Stewart land, like the CIAL controlled land, has alsoexperienced a slow development takeup when compared with the rest of the city. Therefore it is morelikely than not, that it is the nature of the regulation around the SPAZ zone impacting on demand, ratherthan ownership.

The CIAL land is strategically well located in a high profile position adjacent to ChristchurchInternational Airport and SH1 and is ideally suited to a wide range of industrial related businessactivities including distribution warehousing and higher valued business activities which would notnormally be appropriate in a suburban industrial location such as Hornby.

It is considered that the types of high value business activities suitable for the CIAL land in terms oflocation and supply/demand are as follows:

Trade retail showrooms and associated small scale warehousing Service commercial High tech industries including electronics, R & D and assembly Data processing Distribution and freight

The built environment is likely to be low rise with a high level of landscape amenity.

The types of high value business activities suitable for the CIAL land are currently located in the B3,B3B, B4, B4P, and B4T zones. A significant proportion of the B4 zone is not suitable for high valuebusiness activities due to its location adjacent to B5 zones and the absence of main road frontage. Wehave identified 32.8 hectares of B4 land which is considered to be suitable for high value businessactivities.


The following is a summary of the industrial zoned land which is currently vacant and consideredsuitable for high value business activities:

Vacant High Value Business Land SummaryZone Area

ha

B3 6.2B3B 2.2B4 18.3B4P 4.5B4T 0.5BRP 1.2Total 32.9

This land is thinly spread throughout the Christchurch suburban area and therefore is fragmented interms of comprehensive development opportunities.

The above high value business land represents just 5.58% of the total CIVLS supply as at July 2013.

We are of the opinion there is unlikely to be demand for heavy industry / wet servicing in the area of theairport due to the high land values. Heavy industry / wet servicing generally utilises land at the lowerend of the market range and historically has preferred locations such as Bromley, peripheral Hornbyand Rolleston.

Development of the CIAL land with high level commercial activities will result in a higher employmentdensity in comparison with industrial activities that will occupy most if not all of the additional landlocated in the LURP. Our expectation is that most development in these areas will be large scaledistribution warehouse operations which have a very low employment density.

The CIAL land has the potential to be developed as an important employment and service hub with thebenefit of substantial traffic volumes passing at both Memorial Avenue and Russley Road frontages.

In summary, there is currently a very limited supply of business land in Christchurch which is suitablefor high level commercial activities. The addition of a further 469 hectares of business land proposed inthe LURP in Christchurch will not alleviate this situation with only parts of the North West Area landlikely to fulfil this role. There is currently little choice for market participants requiring high levelbusiness development land on the western side of Christchurch.The addition of the rezoned CIAL landto the normal Christchurch business land supply will have a material effect on supply, demand anddynamics of the Christchurch business land market by increasing the supply and therefore reducingcompetition. Notwithstanding this additional supply we are of the opinion the land will provide a valuableaddition of scarce high level commercial activity land adjacent to major transport arterials.


We have assessed typical industrial land values throughout suburban Christchurch in order to comparewith the SPAZ land under its current zoning and its value if the zoning rules are relaxed.

The following is a summary of values of a typical 5,000 square metre site in the following industrialbusiness locations:

Christchurch Suburban Land ValuesLocation Value

$ psm

Belfast $150.00Rolleston $120.00Hornby $240.00Sockburn $270.00Middleton $280.00Riccarton $325.00Sydenham $400.00Woolston $200.00Bromley / Aranui $130.00SPAZ $260.00

If the SPAZ rules are relaxed to allow a wide range of business activities similar to those in theBusiness 3, 4 and 5 zones, we are of the opinion there would be an increment in value of between$10.00 and $20.00 per square metre but more importantly development takeup would be significantlyfaster.

We are of the opinion that putting aside the CIAL policy of not selling land there would be an increase ininterest and demand for land in this location given its excellent position adjacent to SH.1, ChristchurchInternational Airport and other high value level activities.

Utilisation of this land to a more efficient degree significantly increase the economic efficiency of thislocation taking advantage of existing supporting infrastructure which is already developed.

In the general location, the LURP has identified 133.3 hectares within the north west area defined asAreas B6, B7, B8 and B9 on the LURP planning maps. Availability of this land is uncertain in the shortto medium term because of zoning and servicing hurdles required prior to development.

The only areas which are close to or adjoining existing infrastructure is Area B7 where the TaitFoundation is currently completing development of the Tait Park campus on part, and Area B8 at theintersection of Memorial Avenue and Russley Road. The other areas are in effect very much Greenfieldareas which will require significant infrastructure and will present issues in terms of transport access offSH.1.

Area B9 comprising 40.94 hectares adjoins the Avonhead residential suburb where there has alreadybeen neighbourhood opposition to this land being identified in the LURP for rezoning to business.Achieving formal rezoning of this land will be challenging and development potential is complicated bylimited services in this immediate locality.


3.0 COMMERCIAL LAND MARKET

3.1 SUBURBAN COMMERCIAL MARKET OVERVIEW

The following is a summary of the principal suburban shopping centres in Christchurch.

Christchurch Suburban Retail Shopping CentresShopping Centre Location Majors

#1. Westfields Riccarton Riccarton 62. Northlands Papanui 43. The Palms Shirley 34. Eastgate Linwood 35. Hub Hornby Hornby 16. Bush Inn Centre Upper Riccarton 27. Merivale Mall Merivale 18. South City Centre City 29. Moorhouse Central City 110. Barringtons Spreydon 211. Avonhead Avonhead 112. Dress-Smart Hornby -

The above shopping centres are in the main located in the principal suburban commercial centresthroughout Christchurch. Many of these locations are defined in the LURP as Key Activity Areas.

The following is a map identifying the principal shopping centres and / or suburban commercial centres:


The various earthquakes which have occurred in Christchurch in 2010 and 2011 caused catastrophicdamage to large residential areas, in particular the eastern suburbs and the hill suburbs. TheGovernment through the Canterbury Earthquake Recovery Authority (“CERA”) announced on 23 June2011 that all land in Greater Christchurch and in the Waimakariri District had been zoned into fourresidential zones – red, orange, white and green. Currently 7,860 residential properties in Christchurchand Kaiapoi/Pines Beach are situated in the red zone with a significant number of these located in theeastern suburbs. It is not feasible to rebuild on land in the red zone and all insured home owners havebeen offered a relocation package.

Potentially almost 10,000 homes may be demolished and homeowners relocated to other suburbanareas of the city.

The northern and western areas of Christchurch City are the areas identified at the principal areas ofgrowth are where any displaced eastern suburb residents are relocating to. We are of the opinion thiswill place greater pressure on the existing commercial services on this side of the city.

3.2 RETAIL LAND SUPPLY

The CIVLS identifies just 1.2 hectares of Business RP (Retail Park) land, which is located in MoorhouseAvenue adjacent to the Christchurch CBD.

In the established principal suburban commercial centres there is limited if any land available for futureexpansion and development.

On the northern and western side of the city the only land zoned for future retail development is 9.21hectares at the intersection of Main North Road and Radcliffe Road, adjacent to the Northwood SupaCenta, and at Yaldhurst Village, on Yaldhurst Road where there is 6.55 hectares forming part of theLiving G (Yaldhurst) zone has resource consent for a neighbourhood development.

AMP Capital and their joint venture partner were partially successful in an application to theChristchurch City Council for a private plan change to rezone land between Radcliffe Road and the StyxRiver. The land is now zoned Business 2. It plans to build the Styx Centre and has consent for 20,000square metres of retail and office space as well as community facilities. This project remains within theplanning process with development dependant on commercial demand expected to be within the nextfive to ten years.

The closest major suburban centre is at Hornby where the Hub Hornby Shopping Centre is currentlybeing expanded to incorporate a two level Farmers department store. There is limited if any scope forany further development at Hornby following recent supermarket and DIY store construction.

The proposed changes to the SPAZ zone within the Terminal Precinct provide for the addition of a widerange of convenience related commercial activities over and above the original SPAZ activities.


Relaxation of the current SPAZ rules in the proposed Terminal Precinct will allow a wider range ofcommercial activities including retail, commercial services and offices, which are considered to beappropriate given the nature of Christchurch International Airport in terms of location, profile andcomplementary activities and also the major transport interchange position.

The CIAL land in and around Memorial Avenue is considered to be suitable for the establishment of acommercial centre to service the large number of people visiting or working at the airport and the highvolume of daily commuters passing along Russley Road to and from their workplaces in Hornby andwho live in the northern residential suburbs and townships north of the Waimakariri River.

The current supply of commercial related business land in Christchurch is extremely limited and apartfrom those areas identified earlier in this evidence and small neighbourhood commercial centres withinGreenfield residential subdivisions, there is very limited scope for any additional commercialdevelopment to service the airport and western suburbs, even taking into account the consented retailcomplex currently being developed in Memorial Avenue.

The Terminal Precinct land within the CIAL land holding in and around Memorial Avenue could wellprovide an ideal location for the development of additional commercial services to cater for thepopulation growth on the western side of Christchurch City and also to provide service convenience tothe significant passing traffic volumes.

Apart from LURP Area B8 at the intersection of Memorial Avenue and Russley Road, there is no futureland proposed for retail and service commercial land in the sector of the city.

The LURP Area B7 will most likely provide for further office type accommodation

The value of land in the Terminal Precinct is likely to increase from $400 to in excess of $500 persquare metre should the zone rules be relaxed as proposed.

COLLIERS VALUATION

GARY SELLARS FNZIV, FPINZRegistered Valuer, DirectorEmail: [email protected]

Contact Details: Colliers International (ChCh) LimitedPress House, Level 7158 Gloucester StreetPO Box 13478Christchurch 8141Phone No. (03) 379-6280

Documents

Business Land Assessment - Christchurchresources.ccc.govt.nz/files/TheCouncil/policies... · Colliers International Valuation estimates that the vacant industrial land takeup in the