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Auckland Airport alive with development

By Christine Nikiel

Thursday 24th April 2003

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The property team at Auckland International Airport faces a busy year of new developments.

Stage two of the 17,000sq m shopping centre and stage two of the Airport Commercial Park are underway, new buildings for DFS duty free shopping, and freight companies Excel and UTi.

Meanwhile, AIA will have to fill the positions left by general manager commercial Murray Barclay, who is leaving to become chief executive of Urbus Property Management, and former AIA chief executive and managing director John Goulter, who is stepping down.

AIA's philosophy toward its huge amount of property has changed since its 1998 listing. It was rid of its risk-averse main shareholder ­ the government ­ and decided it was time to invest in development and make money off the land.

AIA's property business was "pretty much zero" in 1998, general manager corporate Chris Curley said, but it had ramped up remarkably since then. "Property brought in about $50 million then. This year the portfolio was $98 million. With our programme it won't be long before it's up to $200 million," he said.

AIA owns more land than Los Angeles and Sydney airports ­ and is spread over 1497ha in Manukau, south Auckland. The property investment portfolio has 30 properties and three town-supply farms, a horse stud and a nine-hole golf course. So far 14ha has been developed for commercial use, with about 220ha left for commercial development, 6ha for retail and 12ha of business park to fill.

Retail is AIA's main source of revenue, with rental from the retail portfolio last year producing $21.6 million.

Earthworks have begun on the second stage of the Airport Shopping Centre where 12 retail outlets ranging from 100-2500sq m are being built. Once completed, the centre will have 17,000sq m of retail, to service the estimated 21,000-plus people who shop at the airport each week.

Landing fees, terminal services and airport development fees and property development make up the other revenue streams.

Developing land for houses is not on the cards for the near future. Mr Barclay doesn't think it will be in the next 10 years. Most of the land is zoned commercial or industrial and to change this in sight of an international runway would be a lengthy process.

AIA got resource consent for a second runway in 2001 but at about $35 million it was not likely in the near future, Mr Curley said.

A new runway will open up further development opportunities for freight- forwarding tenants wanting a close-to- runway location. But AIA won't build runways, roads or infrastructure until there are tenants ready to use it.

The main difference between AIA and other developers, Mr Curley said, was that AIA owned and maintained all the infrastructure it built ­ such as 26km of road. It also owned gas lines, local area network and electricity lines.

Since the recent terminal upgrade AIA has worked hard on its image. Tenants pay for their buildings to be cleaned externally once a year, all tenants have carparking onsite (meaning no cars on the roadside), and all signs adhere to a vertical rectangle format.

AIA's decision to resist advertising hoardings and billboards had cost it some revenue, Mr Curley said, "but people recognise we're not over-commercialised."

AIA has also worked hard to service the 7500 staff, with community services such as a medical centre, a police station, childcare, a vehicle-testing station, car rentals and hairdressers.

"We've got all these people onsite who don't want to have to drive to Manukau to get their warrants of fitness, do the shopping or get a haircut," Mr Ansley said.

Retail tenants range from New Zealand Post, The Warehouse and Foodtown, to clothes shops, cafes and lunchbars. AIA was one of the first international airports to take on McDonald's as a tenant.

Now under construction is Butterfly Creek ­ a butterfly house ­ and a petting zoo, aimed at the many families who come to the airport in the weekend to watch the aircraft.

Meanwhile, AIA has managed to poach a tenant from nearby Ascot Park Industrial Estate, where most buildings and roads were built during the 1980s.

DFS (duty free shopping) is moving from Ascot Park to a new distribution centre and warehouse at the Airport. UTi will move in July into a 3500sq m warehouse and 1560sq m office on two levels, the warehouse to be shared by subtenant Superfreight.

Freight company Excell will add a 10,000sq m warehouse to its 8000sq m premises on the corner of George Bolt Memorial and Manu Tapu Drs.

No 1 Leonard Isitt Dr has attracted Fonterra Co-operative Group to two floors, with Jet Connect, which manages Qantas' domestic operation in New Zealand, taking up the rest.

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