Rosebank Business Centre Report

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Land Values

The degree to which the cost of land in the Rosebank area affects business location decisions has increased over the last five years. This is due to the surge in residential and commercial land/property values. There are two main variables that determine how businesses perceive land costs as an issue. Firstly, businesses that rent or lease land are less likely to raise the cost of land as an issue. Rather, these respondents advised that the cost of land is built into the leasing agreements. Rental or lease values were cited as an issue for some business location decisions in the area, but not for everyone. Some representative quotes include:

"This was one of the reasons we purchased these premises. We looked at the Albany area but found that a similar sized premises cost up to $50,000 more."

"The overall cost of the lease as well as the conditions were relevant. Cost of land is part of the package."

"Expansion possibilities limited because of increasing rental/land costs."

"Not at all."

Where businesses in the area own the land or are considering purchasing land the issue of land costs is more significant. Some entrenched businesses view land costs as a factor that would make them consider leaving. Often these businesses are looking to expand, but view land costs as a constraint. Interestingly, businesses new to the area made part of their decision to locate here, based on the value of land costs. This highlights the varied needs of businesses and the relationship between the context of current operations and how they are viewed in comparison to alternative sites and/or environments. Some representative quotes include:

"Potential for sale and leaseback becomes more attractive to head office, but not to the local organisation."

"CBD would have been our preference. Rosebank prices fitted out budget."

"Need to expand to new building, but prices make this not viable."

"Large degree – building here is too expensive looking for other options."

Land Values Five Years Ago

The question asking for the perceptions of land costs in the area five years ago and to what degree it affected location decisions was designed to illustrate any underlying trend. It is appreciated that the current environment is always more present in people's minds than the past. Notwithstanding this, the information gained suggests two differences between five years ago and presently. The key difference as already outlined is the rise in land/property values. Representative quotes follow on the next page.

"It was more affordable."

"A lot."

A point of difference from five years ago is businesses in the area were much less likely to be in expansion mode. The macro-economic conditions were much less favourable to businesses taking risks and/or employing growth strategies. Expansion is now a common feature within the business environment. Overall, some businesses feel constrained by rising land costs and any associated resource management compliance costs such as:

"It takes months to get a resource consent and some of the demands are unrealistic."

Respondents face important issues when balancing their needs to expand the business along with the reality of spending more capital on land purchases than they have before. A relevant quote is:

"Land wasn't an issue, however, we didn't have the need to expand."