Shortage of Industrial Land to be Tackled in Capital

A shortage of land suitable for industrial use in the Capital is to be one of the focuses of a District Plan review by the Wellington City Council.

A new City Council study has found a shortfall of industrial land across the city. It predicts an overall shortage of between 40-70 hectares of industrial land to accommodate predicted growth over the next 15 years.

Wellington City continues to be the economic ‘engine room' of the region, with over 59% (132,720 out of 225,340) of the region's total jobs. While this dominance is largely due to office-based workers in the CBD, Wellington City also accounts for 40% of the region's industrial jobs (19,761 out of 49,145)*.

The workforce has grown by 18% in the past five years in Wellington City, however growth in the industrial workforce has been much slower at around 3%. Traditional manufacturing has continued to decline over this period but this has been offset by increases in construction, transport and storage activities.

Luke Troy, the City Council's Principal Urban Development Adviser, says current high demand for industrial land and premises and the shortage of available land has meant many companies have located elsewhere in the Wellington Region.

While the study acknowledges that Wellington City is an integral part of the overall regional market and cannot be considered in isolation, there is a danger that companies will instead seek to relocate outside of the region due to the lack of suitable premises in the city.

"This might be particularly important for ‘new economy' industries that are driven by different locational factors such as access to skilled workers, high-amenity business parks, and access to high-quality infrastructure such as broadband," says Mr Troy.

The report identifies very few opportunities to increase the supply of suitable industrial land within Wellington City. Large land areas are likely to be the most attractive to businesses and the most efficient to develop but Wellington is very constrained by its topography.

One major area of employment land that remains to be developed is Lincolnshire Farm – the area to the east of the motorway between Tawa and Johnsonville. Part of this land has been recently rezoned for industrial uses under District Plan Change 45. Mr Troy says the development of this land for suitable industrial uses is important to the long-term economy of the city.

The report finds two main factors are affecting industrial land supply in Wellington – high land values and a permissive planning regime that allows other ‘higher-order' uses to displace industrial activities. Land values for industrial land range from $2000/sqm around the CBD, to $500/sqm in inner locations to $200/sqm in outer locations.

The District Plan applies one zone (‘Suburban Centre') to all of Wellington's commercial centres and industrial areas outside the CBD. This allows any uses to locate within the zone and has led to increased development of non-industrial uses in traditional industrial areas. This includes the development of large-format retailing (such as at Rongotai) as well as residential redevelopment (such as at Greta Point). The report recommends this policy approach be re-examined.

Council planning staff have just started a review of the District Plan Suburban Centre rules. They are due to report back to Councillors by the end of 2008. The review will include consideration of future industrial land supply.

*Wellington Industrial Land Assessment – Property Economics (October 2007).