The market thought we were ‘crazy’: Goodman on $93m land purchase for $250m logistics center

“A lot of the market talk said we were angry at the time,” said the head of a new $250 million warehouse/logistics center in Puketāpapa/Mt Roskill.

Goodman Property Trust’s John Dakin was referring to 2018
market opinion on the Trust’s payment of what was considered extremely expensive at the time, $93 million for the 13.1ha site at the end of Roma St.

It turned out that Goodman wasn’t so angry after all.

But this story begins at the beginning of the last century.

For decades, Foodstuffs North Island’s headquarters were at 58-60 Roma Rd, some 35,000 square meters of construction covering less than 30 percent of the site. But last year, Foodstuffs moved into rented premises at the airport.

Four years ago, Goodman bought the big site. That was before Covid hit and the Trust paid what people at the time said was way above the odds, Dakin recalls.

What those skeptics failed to take into account was the growth of online shopping that was about to arrive during the pandemic.

“We bought the site before the pandemic, but at the time we were really confident that these kinds of sites around the world are incredibly valuable for distribution,” Dakin said standing on the platform of the new 1-foot parcel handling building. ,7ha from NZ Post.

“What has happened is that the remodel has been much faster than we expected. We had a 10-year horizon. But the pandemic accelerating e-commerce and supply chain issues has led to increased demand for storage and It’s really accelerated our plans for not just this site, but other sites as well.”

Goodman initially planned to keep and lease the old Foodstuffs buildings.

But it soon became clear that demand was strong as people were at home and ordering products online.

The distinctive towering pines that once stood there were highly visible from the Southwest Highway/State Highway 20 linking Waterview to the airport. They have been felled.

About 90 percent of existing buildings were recycled, although asbestos was more abundant than initially thought. The volcanic concrete and bluestone rock was crushed for reuse or sold. Only about 10 percent of the materials from the old Food Products building were thrown away. In total, 6,370 tons of demolition material were recovered and diverted from landfills.

“Replacing or reusing outdated buildings and remediating contaminated sites is an important part of our development strategy. It improves the quality and performance of existing buildings without consuming additional land, a finite resource in a growing city,” said Dakin.

Mike Gimblett, general manager of development for Goodman, said a new highway would be built through the site as an extension of where Roma Rd now runs, so while it would be private, it would look like an extension of Roma Rd.

A new roundabout would allow easy traffic access to four new department stores and distribution buildings.

A public cafe is also planned.

About 7,000 native trees will be planted for carbon neutrality and to encourage bird life, Gimblett said.

The NZ Post building would have around 450 rooftop solar panels and 80,000l of water tanks for greywater recycling.

The population within a 20-minute delivery truck’s radius is estimated to be around 700,000 people and the broader consumer catchment has purchasing power of around $23 billion, Goodman says.

“New Zealand consumers have embraced online shopping, making around $7.7 billion in purchases in 2021, an increase of more than 30 percent from the previous year. Growing e-commerce penetration follows offshore trends in markets such as Britain, the United States and China, where online shopping can account for more than 20 percent of all retail sales,” Goodman estimates.

The new warehouse/logistics center is targeting a 5-star green rating from the Green Building Council, with the goal of being carbon neutral.

Goodman plans energy-efficient designs such as automated LED lighting, electrical sub-metering to monitor and measure performance, electric vehicle charging stations, rooftop solar, HVAC systems that use low-emission refrigerants, low-emission double glazing to reduce noise and regulate heat, low-flow water fixtures, rainwater harvesting, low-volatile organic compound materials and finishes, bike racks, and extensive landscaping.

So what does Dakin think all that means?

Perhaps the Trust wasn’t angry enough after all to pay that $93 million for the site.

Goodman is trading around $2.21, down 6 percent annually, giving it a market capitalization of $3 billion, making it one of New Zealand’s largest listed property investors.