In 53 years, from 1858 to 1911, New Zealand's population grew from just over 100,000 to over one million. In the last 98 years it has quadrupled to almost 4.3 million. Despite the fact that New Zealand is a low-rise/low density country, infill development and vertical development are two measures that might help meet the increasing demand for commercial, residential and leisure space.
Simpson Grierson Partner and PINZ Board Member, Phillip Merfield, takes a look at how surveyors, property advisers and owners can make the most of the 'space above their heads' - and literally make money out of thin air.
Aside from engineering (including seismic code) and design issues, adding additional storeys to an existing building can be an economic way from to intensify land use. It can be beneficial in terms of meeting commercial, residential or mixed use needs and indeed, improving the overall urban form. Certainly, no one would ever argue that our urban form has been preserved in aspic.
Where no height restrictions exist, the air above a commercial property can be transformed into something of tangible value. Given the low rise nature of many commercial properties in prime commercial areas, air rights can be exploited, but talking with experts is a must. Air rights are bespoke to the property and locality. One example is when we advised Auckland City Council on was the sale of air rights above an inner city carpark. This radically transformed something with absolutely no value into something of economic value. While any development to exploit air rights will be subject to the RMA in the normal way, in this situation, the council realised value by selling rights to the three-dimensional space above an asset to a developer. The resulting apartments were of a very high standard. Exploiting air rights is a relatively new evolution in New Zealand but is common overseas where physical space is at a premium. Given the need to increase densities in our major centres we are certain it will become more commonplace.
While engineering and design issues can be overcome, some properties may be subject to height restrictions. This is another area where sound legal and planning advice is needed if you are to realise maximum value once you decide to 'go up'.
Maximum height is normally provided for as a condition of a land use consent (rather than subdivision consent). In some cases a subdivision consent and a land use consent for a building may be issued as part of the same decision. If that is the case, any height restriction could be by means of what is called a consent notice (section 221 of the Resource Management Act 1991). Consent notices are used as a tool to ensure compliance with a condition of resource consent. Once a consent notice is registered on a certificate of title, it is deemed to be a covenant that runs with the land and binds all subsequent owners.
Like anything in life, it is important to understand the reason why a building is subject to a height restriction in the first place. This is where a little detective work can reap handsome commercial rewards. The reasoning maybe part of the decision granting either land use consent or subdivision consent and should be available on a council's property file. While reasons are wide and varied it is important to put the property, or the property you are advising on, in the current policy environment. Of New Zealand's 74 territorial authorities, 39 are projected to have more people in 2026 than in 2001. This is where intensification of land use comes into a policy play. While some reasons maybe intractable (conservation/heritage zone or protected views etc), for many it is worthwhile investigating. After all, what made sense and was fashionable in the early 90s, may not be 20 years later.
To vary or cancel any condition, including a height restriction, an application may be made to a relevant council. The process is now similar to that for an application for resource consent, or an application to change or cancel consent conditions. Any application could be subject to public notification, limited notification or processed on a non-notified basis. Each of these three options will require a different tactical approach from you or your client. In deciding whether or not to grant an application, to vary or cancel a condition, a council (or if the decision is appealed, the Environment Court) must assess the effects (positive and negative) of varying or cancelling the condition against the provisions of the district plan. In addition, a council must also take into account the reasons why the consent notice was imposed in the first place, and importantly, whether those reasons are still valid today.
One last word of caution. While going up may be a go, other standards, such as car parking, are tightening. This is the trade off for intensification. Detailed advice from a planner or solicitor expert in the RMA should be sought before proceeding further. This ensures the full context can be added into any business plan to establish if 'going up' stacks up financially.