Caltex Fanshawe St, one of only a few petrol stations in Auckland’s city centre, has recently closed. Z Energy, who operate the Z-branded petrol stations and bought Caltex earlier this year, found that the property is worth more as a development site than as a petrol station.
At the start of the sales process, Bob Dey wrote:
Z Energy Ltd reckons it can make at least 4 times as many millions out of selling the Caltex service station site on Fanshawe St in downtown Auckland as its maximum valuation if it carries on selling petrol.
Z is looking at a sale process, and said in its monthly report yesterday on integration of Chevron NZ Ltd’s Caltex & Challenge brands with Z: “Given the location of the site and the absence of other freehold land in the area, Z expects to be able to sell the property to any number of developers for more than $20 million, which is supported by an independent valuation. For use as a service station, the site can only justify a valuation of $5 million, making it economically sensible for Z to divest the property rather than invest in the current earnings stream.
Z were on the money with this – the site went on to sell to Mansons TCLM for $23.3 million, or $6,000 per square metre of land. Pricey.
This leaves five stations in the city centre:
- BP on Fanshawe St
- Mobil on Quay St
- Caltex on Stanley St
- Z Ronayne St
- Z Quay St
You could call it six stations if you were feeling generous with the city centre definition, and brought in the Mobil on the corner of K Rd and Ponsonby Rd. Beyond that, you need to look in Ponsonby, Eden Terrace, Newmarket for the next closest petrol stations – and these are all development hotspots as well. Petrol stations look pretty underdeveloped by comparison.
By the time it closed in August this year, Caltex Fanshawe St was surrounded by office buildings on three sides (it’s got Victoria Park to the other side). Air New Zealand House was built a decade ago, and recently Datacom House and Fonterra have joined it. The old petrol station site, with a floor area of maybe 400 square metres on a 3,900 square metre piece of land, will most likely end up as a 6-7 storey building, with a floor area of 10,000 square metres plus.
This is the beginning of the end for petrol stations in the city centre: land values are too high for them to be viable in the long term, although some of them will stick around for many years yet while they still have their leases. Poor old Vancouver is in a similar position, and is now down to its last inner-city petrol station.
The stations that remain will have less competition, and may well increase their prices relative to other parts of Auckland. This often happens overseas.
As per previous posts, the overall number of petrol stations in New Zealand has fallen over the last few decades, although it’s levelled out more recently.
For the Auckland city centre, though – and for other ‘high land value’ places as well – the number of stations will keep on trending down.