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Petrol stations in the city centre

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.

petrol-stations-in-new-zealand

For the Auckland city centre, though – and for other ‘high land value’ places as well – the number of stations will keep on trending down.

48 comments to Petrol stations in the city centre

  • Good news, thanks!

    A combination of increased public transit use and electric cars should also help tip the economics against petrol stations over the next decade. I have seen one estimate that around about a 50% penetrance by electric cars would be enough by itself. Obviously must depend a lot on background assumptions.

  • The Z on Newton Road and the Z on Williamson Ave are also “city fringe”.

  • Sailor Boy

    The bp on Fanshawe is part of the saba development too isn’t it?

  • I think petrol stations could be a lot smaller than they are now. In more remote areas the shop is necessary, in the City Centre it isn’t at all. There is also no reason not to have prepaid pumps, which eliminates the need for anyone working there at all. They could easily be half the size that they are now, probably much more.

    • nonsense

      They make more money with the shop that s why it’s there.

    • Ak-Sam

      Yeah – overseas you can use little pumps on the side of the road,just 1 pump with a credit card slot. Takes up a tiny amount of land (5sqm but granted there’s an underground reservior to consider). Here’s a large example: https://goo.gl/maps/ZML1ycGB2DK2
      NZ has a few unmanned petrol stations (Gull at Papamoa comes to mind, plus many marine pumps).

      Another emerging trend is petrol at car park buildings & supermarkets. You can park in designated spots, leave your petrol flap open and an attendant will fill your car.

      • That sounds perfect, small prepaid pumps like the EV charging stations. They have one like that in Te Hana, it’s for trucks to use overnight so I think its just diesel. Also pretty much every marina has a similar setup.

      • Camryn

        There’s a new (Gull?) one in Wellsford that’s just pumps and a kiosk.

      • BBC

        Indeed, urban petrol stations in Europe are often tiny and incorporated into apartment buildings. This is a good example https://goo.gl/maps/CDiZfehqT8M2
        It’s no wonder the ones in Auckland are unprofitable when they take up such an enormous footprint.

        • Scott

          NZ Hazardous substance regulations pretty much rule that out in NZ. (You can get around some of the rules with massive fire walls, but cost is high)

          Personally I think that is a good thing. Bulk quantities of flammable & toxic chemicals are best kept away from apartment buildings.

        • Scott

          Petrol stations closing in cities is common worldwide. Recently the last petrols station in the south of manhattan closed, much to the dismay of the taxi drivers.

          In Auckland , It the high land prices are a major driver. The land is simply worth more as apartments and offices than it is as a petrol station (which due to hazardous substance regulations needs to be low density).

          Other factor is that modern cars are getting better ranges on a tank of fuel. Cars have got a lot more efficient in recent years, generally not offset fully by smaller tank sizes. A really big impact here is the taxi fleets. Previously they ran 6 cylinder aussie cars on LPG, I would guess they would get under 400km to a tank in city traffic. The modern hybrids (Prius & Camry) are both rated for well over 1000km. As such less forecourt space is required per car in the fleet.

          Looking longer term, this trend is likely to continue, combined with electric vehicles that need no petrol at all.

          Also there is a trend towards massive high volume petrol stations rather than many smaller volume ones.

  • Jeff T

    The BP on Fanshawe is a fairly compact station. I use that one the couple of days a week I use my car. I would still want a reasonably central service, it’s the only one available on my central-west travel.

    • Sailor Boy

      But how much extra would you be willing to pay for that? Would enough people pay the 30c a litre extra for the site to be better as a petrol station than as an apartment or office building?

      • Jeff T

        That’s a good point. I haven’t taken any notice of whether I currently pay more to use this station. Must investigate.

      • TimR

        I reckon the Z on Beach Road is the most expensive station in any NZ city. There may be rural locations with very high delivery costs that rival it, but to this day I have never seen such a large mark-up. Still, they seem to have a regular market of mugs keen to part with their money…

        • BBC

          I’ll be happy to see it close, it’s a perfect site for apartments and it currently attracts large articulated trucks which then park across the footpath and road making Ronayne unpleasant as a pedestrian.

          • Bigted

            Z (Shell at the time) for some reason installed a truck stop pump right by the road so trucks using it (it is the only Z truck stop close to the port) have no choice but to stop like that to use the pump.
            I’ve never seen a ‘large articulated truck’ there, seen plenty of medium articulated and small trucks use it and I’ve even used it myself.

        • $2.94 for 95 octane at Lake Waikaremoana is the most expensive I’ve ever seen in NZ.

      • Dan C

        Well petrol at that Z is already 40 cents/ litre more expensive than south auckland. So are you willing to pay 30 cents more, almost a dollar / litre extra for the convenience of a city centre fill up

  • Mark

    There might be more need for charging stations than petrol stations in the future. Not much room needed for those.

    • Dan C

      There will be a need for some, but far less than petrol stations as most commuters will fill up with power at home. Cant do that with petrol.

      • mfwic

        Surely they are more likely to fill up with power at work? Like pens and envelopes etc.

        • With Tesla moving away from free super charging stations due to people’s cheapness, I can’t see companies giving away the power either. The only places that is likely to happen is in countries/areas that are cold enough to have plug-ins already installed in outdoor parking lots.

  • Dan C

    The subway will be a real loss. Far far far more people visited that place to buy a subway than to buy petrol. Hopefully all the new HQ buildings going up wont be too snobby to offer them a lease.

    • Andy

      There is a huge choice of food within about 2 minutes walk of the Subway. And more coming as each building finishes. Lots of workers there who need food.

      • Dan C

        2 minute walk is nothing else but pita pitt and the sofitel. Take ya more than two minutes with the pedestrian phasing just to get to the Green keeper across the road in vic park.

        • Andy E

          Maybe it’s been a while since you were down there. There’s a Columbus, Food Truck, &co cafe, Mojo, Pita Pit, sushi, Atomic and undoubtedly more coming when the new Datacom building opens. 5,000+ people working in the vicinity supporting the choices.

  • luke

    i wish the Z energy on whitmore street in Wellington would close. hopefully the auckland trend catches on in the capital.

    • Ian

      I Think it was the Fanshaw St Caltex station that pumped a world record quantity of petrol over 24 hours back in the 70’s. I couldn’t really see what all the cheerleading was about given that even back then the politics surrounding oil, especially Middle East oil, was controversial.

  • A different David B

    It will be interesting to see how petrol station numbers decline generally as electric cars become more common. The problem with gas stations in the city is you can’t build anything on top of them for obvious safely reasons, whereas EV charging can be retrofitted to exiting off-street parking. The lack of petrol stations may provide a good disincentive to drive into the city, but that disincentive might disappear as EVs become more common and as the number of charging points increase in the city.

    • Enter the next problem, people parking their EVs all day in a charging stall while they’re at work. So unless every stall becomes a charging stall some people are going to end up with issues around recharging, could make it a nail biting drive home or a late night charging after others have left for the day.

      • Dan C

        If your hogging the charge point all day then you dont need a fastcharger. And if all your talking about is a $5 power socket, no reason why you wouldnt add one to each parking space. Assuming the decision has already been made to supply power as a free be.

        • Over and over again developers will optimize profits based on current and not future requirements. They will only put in some infrastructure (in this case charging points) for stalls rather than in every stall. Unless time limits are put in and enforced, people will hog charging points (fast or otherwise), or a fee is associated with using those particular stalls. The result of this is some people will not be able to get a charge while they’re parked and at work.
          Installing power sockets in stalls will cost a lot more than $5 per stall, I suspect retrofit costs will be in the order of thousands of dollars per stall.

          • Jon_K

            I think that you’re spot on about it being likely to cost thousands per stall – Structured cabling installed in a vandalism-resistant manner, also having to conform with fire regs and pressurised water exposure (rain counts as pressurised)… Then there’s the problem of most NZ businesses being despairingly small minded – They’ll want to recoup the capex within a year, then make a profit in the same year, which adds up to the fee being so high that folks will park elsewhere and charge at home. Obviously in this scenario, having charging stations at all becomes non-viable.

            The only way that charging stalls would work, is if they were an induced rarity with a higher cost passed on to the customer for that convenience. Of course, the parking companies would call this a “staged roll out” or pilot whilst still charging more than the capex + opex + normal profit.

            Don’t think that I’m trying to shoot down the idea of charging stations – I think that there should be regulatory incentives/pressure for multilevel parking buildings to have some charging stations. I also think that the pricing will be tricky and that for most people the public ports of very little utility – For those who aren’t intercity commuters, EVs don’t induce range-anxiety any more. Long gone are the days of 100Km range and clenched buttocks. The 2012 Tesla S had 420Km range, the P100D (Aug this year) has 485Km range…

    • Jeff

      Cities will always have some petrol stations, like all supply/demand, eventually the few left can charge a hefty premium and are very profitable.

  • Waspman

    Aucklands property market is more problematic than just housing affordability. Truth is most service stations in Auckland are worth more being sold for building on. It’s an issue for commercial areas in Auckland too. Is a small business worth keeping using that land for its commercial reasons or bulldozing and turning into apartments? I am aware of small businesses closing as rents/leases go up and up! Greed knows no bounds at the moment.

    • Stephen Davis

      I think this may be an issue with how our Unitary Plan has ended up. Most of the city’s area is zoned exclusively for residential, and a lot of that has only minimal development possibility. There’s been a lot of concern about where new housing should go, but not where new businesses should. And likewise, the effect of the cost of housing has seen a lot of attention, but the cost of commercial space is also important.

      So it’s our relatively scarce commercial areas, particularly town centres, that are expected to cope with the brunt of both residential development and remain home to a (hopefully growing) number of businesses. This can push low-rent businesses out of commercial areas, often with nowhere much to go, and mean commercial areas with only upscale tenants.

      As the inner city continues to grow, I think the mixed-use fraction of it also needs to grow, rather than remain mostly residential suburbs. We also need to allow more scope for small local-catchment businesses in residential areas (kindergartens, dairies, cafes, GPs, etc.). In some cities (e.g. Wellington) these uses are generally allowed in “residential” zones. Auckland requires discretionary resource consent for all but the smallest of operations.

  • evanjames

    The Z on Beach Road is a regular of mine, simple because it is the only Z service station this side of Onehunga with a truck stop pump – It also sells great coffee, very important for us thirsty truckees, and I can watch the trains while my truck fills. In fact I have yet to have a bad cup of coffee from any Z service station, or BP either. Can’t say that about one of the other brands though.

  • Guy M

    Had to try and fill up a friend’s car in New York once – interesting experience before GPS – being Manhattan, there is huge land costs, and bugger all gas stations. From what I understand, nearly all the gas stations on Manhattan island had then / have now moved off to New Jersey / across the Hudson etc, and people fill up before driving to work. Which is fine, except if you have forgotten to fill up, and then need to hurriedly skedaddle back to the burbs to fill up your slurper…. The modern parallel being, trying to find a elec charging station in town today. But in a way, petrol has its advantages – you can fill a jerry can with petrol, but hard to lug a spare battery pack to your car….

    One of the downsides, I guess, from developing former petrol station sites, is the inevitable pollution of the sites. The tanks leak into the soil perhaps? And also the reluctance of developers to build over an existing gas station – not a nice prospect to have a hazardous explosive substance downstairs and apartments over. We probably won’t have such issues with electric charging stations….

    • It isn’t a reluctance to develop over former sites so much as mitigating the risk coming from pollution. This can be hugely expensive to remediate. Not such a problem if the gas station was owned by a major brand, but if it was a “mom and pop” store then there isn’t someone with deep pockets to go back on to pay for the work.

  • Surely one of the BPs on Jervois is due to go, presumably the smaller one closer to St Marys Bay Rd… better uses for that site.

    Anyway, they’re all going to go the way of video stores, just a question of how long that transition takes.

  • “…and may well increase their prices relative to other parts of Auckland”

    They are already around 20 cents per litre more than other parts of Auckland. I recently made the mistake of passing up 1.78 in Swanson and topped up in Beach Rd for 1.96.

    Passing up suburban pricing for CBD pricing, I should have known better. Cities are by their very nature very costly to run, thus everything has a “city economics surcharge”.

  • Don

    It seems strange that central city apartment dwellers with vehicles have to leave town to refuel their vehicles. More congestion!
    Will they all own electrical vehicles recharged in their apartment carparks?

    • Don most inner city dwellers with cars mainly use them to leave town, so that’s hardly an issue.

      And yes, they will charge at home, current (sorry) E-car users charge 85% at home and most of the rest at work, so the opportunities for urban e-stations are low.

    • Nick

      Here’s what will really blow your mind, Don. Many city centre apartment dwellers don’t actually own a vehicle! And wouldn’t want to.

      • Jeff T

        Not sure on that one. Many of us inner city dwellers have vehicles. I use mine twice a week to get to work and another benefit is travelling against the flow of traffic. I appreciate having a station in the city to fill up at. It’s all part of the rich variety of choice that’s available as a city dweller.

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