Australia's northernmost capital city has faced some tough challenges in its history, from its sheer isolation, enemy bombing in WWII, to the recent devastating cyclones, but each time it has bounced back.
So it was going to take more than a global financial crisis to thwart Darwin's plans to develop one of the biggest airport commercial real estate projects in the nation.
Named the AXIS 12Ôü░130Ôü░ Business Park, after Darwin's co-ordinates, 12 degrees south and 130 degrees east, and to convey its international ambitions, this 60-hectare precinct is being developed as Darwin's first integrated business and leisure 'urban habitat'.
Comprising offices, retail, showrooms, bulky goods suppliers and entertainment and leisure facilities, the A$2 billion AXIS development will occupy an area roughly half the size of Darwin's Central Business District (CBD), when fully developed.
So why build it here? According to Ian Kew, CEO of Darwin International Airport (DIA), while aeronautical activities will always remain the priority for the gateway, there are vast tracts of land around the gateway that will never be required for aeronautical purposes.
Darwin remains a developing economy with significant economic and population growth projections - and people need to work, and shop.
"We think the long-term value of such a large parcel of land so close to the CBD is immense," he said. Other airports in Australian capitals - notably Brisbane and Melbourne - have large land banks as well, but none so centrally located. "This is what makes Darwin's AXIS unique," Kew says.
Due to the compact nature of the Northern Territory capital, the precinct is remarkably convenient for the end user.
DIA is located just 8km from the city centre, and reachable within a 10-minute drive of 80% of the population - just the place, thought Northern Territory Airports Pty Ltd (NTA) for an integrated business park.
The idea was first mooted as early as 1999, soon after privatisation by the Federal Government, as part of a new airport master plan.
That plan, since approved, involved a parcel of what was then undeveloped land identified as a "blue sky opportunity" for non-aviation mixed-use development.
Kew's vision was to create an "inspiring urban habitat" (defined as a balance of the natural and built environments that melds people and space).
The tenants would be handpicked, representing a mix strategically chosen to meet Darwin's diverse commercial needs.
Hardware giant Bunnings Warehouse was the first to sign up, opening its doors in 2006, and from all accounts there has been plenty of interest.
Darwin and its airport might be tiny by global standards, but it has a booming economy, a rapidly growing population, an established mining industry, and an emerging oil and gas sector.
While it was originally envisaged that the first stage, a bulky goods development, would be up and running by mid-2011, to date, Bunnings remains the only tenant. Ross Baynes, director property, Northern Territory Airports Pty Ltd (NTA), hired late last year to progress the project, said the global financial crisis had delayed the plans.
The precinct's joint venture partner was the first to succumb, followed by several key prospective anchor tenants.
Potential deals with leading retailers, who had identified AXIS as their preferred site for expansion, failed to close.
Despite these setbacks, management remains committed to the original vision.
"What we've got is sound," insists Baynes, buoyed by rebounding inquiry. "However, the end product will be market driven."
Indeed, the two-year hiatus provided time to take stock. It gave them opportunity to refine the AXIS precinct master plan and to elevate its status as a truly ecologically sensitive and commercially sound development.
The premise is one of sustainable design. It includes solar principles, energy and water conservation throughout the park, and significant allocation of space for conservation, landscaping, and outdoor community amenities such as alfresco cafes, cycling and walking tracks. Even quiet, chill-out zones will be provided.
Indeed, this concept of an urban habitat - where work and lifestyle concepts are balanced in an inspiring landscape - was always going to be the project's "X-factor" . It was felt that this special place, with its exhilarating sense of space, prestige and functionality, would be unrivalled anywhere in the Northern Territory.
Ross Baynes, who has been involved in other Ecologically Sustainable Design (ESD) projects, says what's been done with the AXIS master planning is a great start.
"But in this field, the bar always rises." "We are not looking at what the market was two years ago, but what it will be like in two to five years time," said Baynes.
"The delayed start provided time to say 'let's future-proof this' and that means targeting a Green Star business park of environmentally sustainable design, utilising smart, ecofriendly principles that minimise its footprint on an increasingly fragile local ecology." Hence, DIA has engaged Cundall, a renowned Australian ESD engineering company, to advise on how AXIS can shine.
Tweaking of the design to allow for innovations like rainwater harvesting and solar energy generation are just some of the enhancements that Baynes believes will "future proof" the park. Such measures, he hopes, will also appeal to the corporate social sensibilities of the brands he aims to attract.
"We are taking a high level of corporate responsibility, as do our (prospective) tenants," said Baynes, citing the likes of supermarket chains Woolworths and Coles, and retail giant Freedom - some of Australia's biggest corporate names - who are all "very concerned about their carbon footprint."
Kew says the airport company remains "very much committed" to the AXIS project, believing that a centrally located business park presents a real opportunity to develop significant revenue.
The park's customer base will be as diverse as Darwin's economy itself, Kew believes.
Darwin may not have a financial services sector or heavy manufacturing, but it has a large percentage of Territory and Federal public servants, and 12% of Darwin's population is comprised of Australian Defence Force related personnel.
With the price of commodities booming worldwide, the Northern Territory's mining sector is gathering steam, while the oil and gas sectors are burgeoning, he said.
There is virtually no unemployment in Darwin, and the residents have money to spend. "The average family income in Darwin is 15% more than Melbourne, Sydney or Brisbane," says Kew.
"People come here to work - it's quite a different population mix and economic profile than elsewhere.
The economy is strong, and there is increasing demand for premier office space in the CBD."
The airport itself employs 1,600 people, representing a large consumer base in its own right, and accounts for about 2% of the Northern Territory's Gross State Product (GSP) as it stands today.
International tourism is on the rise, too. Darwin is the closest Australian international airport to Asia, and NTA recently signed an agreement with the Qantas Group to expand its airport facilities to develop an international hub for its budget carrier, Jetstar.
All of these positive indicators, underpinned by a population with a high disposable income, "make a lot of sense for retailers" , Kew said.
Meanwhile, the airport continues to develop its own critical mass. There are now three different hotel facilities on airport property, providing 550 accommodation rooms.
In other major infrastructure projects on airport property, DIA has already built offices for the Federal Government, and is building new facilities for the Australian Federal Police.
Darwin may be geographically isolated but that is another factor in favour of the AXIS concept, given the cost of moving freight to or from other capital cities.
"People appreciate the connectivity of doing business at the airport," Kew said. "We see real interest in what we would call non-aeronautical business, as well as more traditional aviation business," says Kew.
Ross Baynes, who says he was hired "to get deals done" , may soon have some good news to tell. In the last four months, says Baynes, the enquiry register has tripled - partly through marketing, and partly through the direct approach.
"This tells me the interest is back in the marketplace, both from local and national (prospective) tenants."
"We always want to do more faster, but it is important to develop the airport business in a sustainable way, to produce long-run returns that provide real value to our shareholders (who are 100% Australian owned being predominantly Australian Super Funds)," adds Baynes. Ian Kew shares his optimism.
"I'd be disappointed if we didn't have a number of major retailers secured this calendar year, and construction started by middle of next year," he enthused, although adding that any deal will be carefully considered.
Global Airport Cities 2011 Issue 2
