BEFORE THE HEARINGS PANEL

Transcription

1 BEFORE THE HEARINGS PANEL In the Matter of: The Resource Management Act 1991 And Proposed Plan Change 15E: North East Industrial Zone and Extension Area Application By: Palmerston North City Council STATEMENT OF EVIDENCE BY GEOFFREY JOHN BLACKMORE Dated: 1 August 2015

2 INTRODUCTION AND GENERAL EXPERIENCE 1. I am Geoffrey John Blackmore, a Palmerston North resident since mid 1977 initially employed as the Urban District Valuer for the Government Valuation Department with responsibility for all Government Valuation functions (including rating assessments) from and including Waikanae in the south to Wanganui in the north. 2. I am a Registered Property Valuer and Fellow of both the New Zealand Institute of New Zealand and the Property Institute of New Zealand. I have been continuously employed in property valuation for over 45 years. 3. In 1985 I elected to establish my own Public Valuation practice which is currently called Blackmore Group. Since establishment our Company has delivered over 55,000 valuation assessments covering a myriad of urban and rural requests; we are possibly the largest provincial practice in New Zealand. 4. My personal experience has largely focused upon commercial and industrial properties both local and national however I have previously advised and reviewed both Palmerston North and Wellington City Councils in relation to desirable rating system changes and continue to advise the tertiary education sector and Defence Forces. 5. I am a passionate Palmerston North resident which has given rise to appointments on the Palmerston North Enterprise Board, past Chairman and President of New Zealand Institute of Valuers Branch and Milson Rotary Club. I am a current Central Government appointed member of the Land Valuation Tribunal. PURPOSE 6. Upon instruction from the Palmerston North City Council in this evidence I provide my overview opinion of: the Palmerston North industrial development and greenfields markets, the challenges planners face in relation to rezoning such as proposed under Plan Change 15E (PC15E) and the competitive forces in-play when such a proposal is advanced. Page 2

3 My instruction does not require imperial measures but does request an objective overview in relation to present land availability, likely takeup if available, and any other matter I consider relevant. 7. Personal background Industrial Rezonings In relation to Palmerston North Industrial rezonings I have given expert valuation evidence on behalf of Applicants seeking industrial rezoning in the following instances: Westways Corporation now identified as East Terrace Estate 1986 approved North East Industrial Rezoning 2004 approved Midhurst Industrial Rezoning 2007 approved Richardsons Line Spot Rezoning 2008 not approved 8. Industrial Supply and Demand Whilst City Planners can reasonably accurately monitor undeveloped land in any zoning category and by reference to building consents indicate take-up volumes they are in no position to realistically forecast actual supply or demand and I outline some local examples to support this position. 8.1 Tremaine Avenue and Inner City The traditional industrial sector, predominately developed in the 1960 s now offers both pure industrial and service commercial establishments. This locality is near fully developed with buildings and is verging upon redevelopment consideration however such redevelopment is impeded by traditional land pricing, residential interfaces and changed development considerations which lead to current site aggregation requirements. A significant area within this traditional location was rezoned Fringe Business in 2008 to accommodate large format retail/trade-based supply developments. Land values are between $350 and $500 psm for best locations. Page 3

4 8.2 Fairacres and Bisley Industrial This location is in the northern city quadrant over the Main Trunk Railway Line in the Milson locality. The subdivision commenced in the early 1970 s and nicely developed subsequently. There are no sites remaining for development apart from quite small allotments i.e. under 2,000 square metres. Land value $250 psm. 8.3 East Terrace Estate (formerly Westways Industrial) This area was rezoned to Industrial in the early 1980 s and fully developed as a large lot greenfields subdivision with developer s intent to provide an office park environment. The initial development failed, and the fully serviced and roaded property comprising over 30 large lots was taken over by more local property development interests. There remain five undeveloped greenfield sites however three of these are retained in adjoining developed property ownership and will not come to the market with any level of certainty. Land values - $160 psm. 8.4 North East Industrial North East Industrial was a rezoning in 2004 to specifically accommodate large footprint developments. The rezoned area encompassed some 90 hectares of which there remains some 60 hectares visibly available for development. A portion of the developed area is encompassed in roading and services areas. This holding is mostly owned by a single company, Argosy, which has its holding currently marketed for sale. Approximately 11 hectares of the 60 hectare zoned remainder is either held or committed to adjoining owners so it is most unlikely to become market available for sale land vales $70 - $90 psm for large lots. 8.5 Midhurst Industrial This was a private rezoning change in 2007/08 where a significant block of rural land, some 13.6 hectare was rezoned for small lot industrial development. Whilst this property is currently Industrial it remains in rural usage because of a number of factors : a downturn in financial markets, restricted access from Midhurst Street requiring street and service upgrading, a general limitation upon building stud heights because the property is largely under the Palmerston North Airport flight path. Land value $90 - $160 psm assuming preorganised (paid for) access, levelled site and land subdivision with services. Page 4

5 8.6 Napier Road Industrial Again a private rezoning change circa 2008/09 involving some 4.5 hectares of rural land industrially rezoned. Subdivision roading and services are in place envisaging a small site saleable provision. The developers have recently sold the enlarged subdivision to Bupa, an Australian Retirement Village developer which intends to develop the property for village establishment. This property recently ponded following nearby flooding. Whether envisaged development proceeds is unknown, however the property is not currently offered for industrial development. Selling price estimated at $80 psm. 8.7 Others In addition to examples quoted there are Greenfields sites further removed from Palmerston North urban fence being in Ashhurst and Longburn; these locations are generally not favoured industrial situations for reasons of size, access and services availability. 8.8 Challenges Urban Planners face a challenging task forecasting and providing for future growth. The position is most difficult in relation to industrial zone extensions that need to be cohesive, have good transportation access and be removed from residential interfaces. It is difficult for Planners to determine what land may or may not be available to the market at any one time and the market itself tends to be lumpy and in my experience, cyclical at 7-9 year rests. I have already identified Palmerston North Industrial sectors and those bare land holdings which are most unlikely to become available to the market with these significantly reducing purchasable site availability. Then there are other controlling influences centering around individual site footprints, area and development land ownership which in Palmerston North industrial locations extends to very few owners. Ownership is an important factor often overlooked since it sometimes leads to availability deprival for reasonable cost. The challenges I have raised were demonstrated in the proposed/failed Richardsons Line - Roberts Line private rezoning application to rezone 10 hectares for industrial use specifically to accommodate an enlarged Progressive Enterprises Distribution Warehouse; this planning application was made at a time when there appeared to be ample undeveloped industrial Page 5

6 land available to the market. (Manawatu/Palmerston North) service availability. The application largely failed for cross boundary MARKET 9. Subsequent to 2005/06 the industrial land sales market has shown decline in volume transactions and price recoveries; there are two reasons for this. First,the North East Industrial Zone had been put in place but the predominant owner elected to undertake substantial building developments without land subdivision or sale ie Ezibuy, Allflex, Hookers etc which were all retained in ownership on a leaseback basis. With one exception undeveloped land within North East Industrial zone was not actually offered for sale until late 2008/2009. Secondly, and a little later the Global Financial Market collapse had national effect with businesses closing shop on new development initiatives. As can be seen from the following table; however industrial land pricing has subsequently improved to near pre 2008 pricing levels. The following is a table showing greenfields vacant industrial land sales over the past ten years. Year Recorded Total Total Av Price psm Sales Volume * $ Price Area ha * $ 7,847, $ $20,829, $ $ 4,134, $ $ 3,167, $ $ 3,568, $ $ 5,466, $ $10,275, $ (figures not available) $ 4,862, $ $ 7,935, $ $ 4,194, $ Page 6

7 NB Sale volume and total area should not be confused with actual land consumption through new building development. NORTH EAST INDUSTRIAL ARGOSY 10. North East Industrial provides the predominant industrial land-bank available within Palmerston North however in some respects the progression towards maximising development and land sales opportunities has until quite recent times been hamstrung. First there were those matters relating to zoning ordinances and requirements which prohibited industrial vehicle access onto Richardsons Line, together with an internal roadway framework to be established, services extension and stormwater detention pond creation. Then there was the initial developer s insistence upon physical development and leaseback rather than sale of bare land or subdivision. By the time Argosey (the current owner) took near full ownership circa there were very significant outstanding development issues to be addressed. This is to say although North East Industrial was suitably zoned and fresh development opportunities available subsequent low uptake was further compounded by the Global Financial Markets Collapse. Argosy has progressed to attend matters for compliance at considerable cost and now markets the remaining 50 odd hectares within its undeveloped but serviced land holding for sale. FUTURE MARKET 11. From the mid 1980 s Palmerston North was mooted to become the Transportation Hub for the lower North Island and over years subsequent the City has become so, albeit not in a form initially anticipated. Over the past 10 years the predominance of fresh development has centred around: Distribution Warehousing Chilled Storage Depots Transport Depots Truck Servicing Facilities Page 7

8 The reality of assertions can be seen in Foodstuffs Distribution Centre, Ezibuy Distribution Warehouse, Mainfreight Development, Foodstuffs Cool Storage Complex, Steel & Tube Distribution Centre, New Zealand Post Service Centre, DKSF (Brandlines) redevelopment, Big Chill Cool Storage complex (plus three other cool storage complexes). There are other examples to quote. Then to service foregoing complexes there has been significant increase in road transport servicing facilities. Palmerston North is now a base for lower and upper North Island distribution particularly in relation to road transport but also including rail. The position outlined is clearly understood by New Zealand Transport Agency (NZTA) and the Regional Land Transport Strategy (RLTS) which supports the long term planning of an Outer Ring Road largely through Manawatu District; this will have direct linkage into North East industrial land. The NZTA and RLTS initiative is important to the Palmerston North community both from safety and commercial progressions. Road Transport vehicles are now approved longer and heavier than in past years. It is desirable to limit oversized vehicles from traditional Palmerston North industrial locations for reasons of road safety and infrastructural wear and tear. However larger vehicle operation does generally require enlarged site footprint for vehicle manoeuvring so site sizes within Industrial usage category are likely to increase over time, and the North Eastern industrial location will be the focus for this. PROPOSED PLAN CHANGE 15E 12. Having reviewed rezoning proposals and with the proviso which can be addressed over time in [13] below, I consider the proposed Plan Change is positive for the Palmerston North community and should be approved. The reasons for my conclusion are as follows: The proposal offers clear certainty, opportunity and cohension for Palmerston North Industrial development over the ensuing 20 years at least. Page 8

9 The onus for future development and servicing will largely rest with the property developer demand in relation to services extension. Rezoning has capacity to accommodate large footprint establishments and introduces an element of competition into the market for land supply given multi rezoned ownership. The proposal has planned large/heavy transportation linkage to North East Industrial which will not require urban centre disturbance. Limitation upon Palmerston North Ratepayers for City Service extension unless demanded by developers at significant cost to themselves through development levies initially. Local opportunity for further employment through future development. NEGATIVE CONCERN 13. My negative concern entirely relates to rezoned property rating and ownership costs. The Palmerston North rating system is not currently organised to accommodate an industrial rezoning of this quantum given the years pre-development take-up. The position outlined is complex given two independent authority involvement. The rating position is not insurmountable but will need considered review in relation to a phased introduction to full industrial rate collection under the prevailing differential Rating System employed by Palmerston North City Council. Yours faithfully BLACKMORE GROUP G J BLACKMORE REGISTERED PUBLIC VALUER (FNZIV,FPINZ) Page 9

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