Underground space commercial development what price for success?

A.C. Robertson Tennent, Isokangas Pty Ltd, Consulting Mining Engineers ABSTRACT: While Australia has one of the highest rates of civil and mining tunnelling advance per capita in the world, the use of tunnelling for other than infrastructure and mining development has been limited for a number of reasons. These include cost and project cost overruns, the complexity of approval processes and difficulties both during construction and operational phases. This paper examines the potential application of underground space commercial projects in the cities and major centres in Australia and proposes potential applications for the future, which suit the demands of sustainable planning and urban expansion. The paper also provides examples of economic underground commercial developments, either as stand-alone projects or as integrated developments with infrastructure projects. 1. INTRODUCTION 3. UNDERGROUND COMMERCIAL PROJECTS - CONSIDERA TIONS Considera t i o n s i n t h e a s s e s s m e n t o f a n underground commercial project include economic, engineering and planning aspects. Economic considerations are: The value of the land (above ground and below ground). The excavation and construction cost. The value (for sale) or cost of removal of the material excavated (material characteristics depend on the type of equipment used in excavation). Insurance cost (related to risk). The value of the excavation or voids to the potential users. The access cost (direct access eg p ortal in vertical face or ramp access or shaft access). Maintenance and operating cost. The unquantifiable costs or values - amenity, environmental, security etc. The engineering considerations are: Method of excavation (roadheader, drill and blast, cut and cover). Ventilation, entry and egress. Fire risk assessment and monitoring. Drainage (self drainage preferred). Quality of rock excavated for aggregate or fill. Engineering innovation eg OneSteel DuraGal modular mezzanine flooring system. Pillar orientation, size of pillars and size of openings.

Underground infrastructure projects usually do not consider a commercial component although in many cases, this may help justify the project from a financial perspective. This is often because of the high capital cost of the project although underground commercial development can be shown, in a number of cases , to be more cost effective than above ground projects when all of the parameters associated with a development are taken into account. 2. UNDERGROUND SPACE AND URBAN PLANNING Some examples where an underground commercial development fits in with an infrastructure project or major underground project include: As part of a major connection eg under river tunnel connection. The commercial development can form part of the access or egress. As part of the use of a surface quarry after completion by development from the final floor or benches. As part of an underground quarry, as voids become available. As part of a major surface development in good quality rock by developing into available free faces.

Planning considerations include: Volumetric Titling planning for Title in Strata. Environmental issues n o i s e , s u r f a c e disturbance, visual amenity, air and water pollution. Potential for further expansion. Easements access, emergency and alternate egress. Possibility of locating infrastructure underground eg electrical sub stations, water storage, ventilation fans, filters, air conditioning plant etc Services, alternative power. 4. PROPOSALS UNDER EVALUATION

shows the portal access to the archiving areas (approx. 8.5 m wide). The orientation of the layout is dependent on the dominant geological and geotechnical aspects of the excavation area. The sizes will also be related to standard archive hardware (compactus/shelving) and mobile equipment. It is proposed to construct a mezzanine floor for archives storage. Lifts and stairs would most likely access this floor. An example of an underground facility is the National Self Storage at Indooroopilly, Brisbane which has the car parking on the bottom level with heavy self storage facilities and lighter self storage with stair and one tonne capacity lift access on the mezzanine floors. Features of the proposed facility could include: A total excavation height of approximately 6.0 m . A l l o w i n g f o r a m e z z a n ine floor thickness of 300 mm, this gives an average floor clearance height of 2.7 m. A lift and powered trolley system is used to transport items to the mezzanine floor (manual system area). An automated/robotic system using the latest library/warehouse location and retrieval system operating for most of the mezzanine area. A palletised system for bulked archiving using battery (or fuel cell) powered forklifts. Storage reach and radio, barcode or conventional logging to be used. An area for receival, despatch, sorting, coding and facility management. Services as required including air conditioning, power, communication, air quality monitoring, security etc.

Tennent, Isokangas Pty Ltd (TIP), Consulting Mining Engineers have evaluated a number of proposals for commercial underground developments in Australia, based on their experience in designing and costing mining projects. These proposals include stand alone underground archives facilities of around 2,000 m2 storage capacity, a 5,000 m2 self storage facility as part of a housing development in a quarry and a number of major commercial developments of 30,000 40,000 m2 in city centre or major regional or suburban centre areas. The basic excavation design uses underground room and pillar mining concepts utilising traditional drill and blast methods or mechanical rock cutting using roadheaders or tunnel boring machines (TBMs). TIP have a strategic alliance with King & Co, major commercial property developers in Brisbane in respect of advancing the use of underground space. This alliance is specifically to investigate commercial development opportunities in disused quarries around Brisbane and at Greenfield sites or in association with major infrastructure projects. King & Co can assist in identifying commercial opportunities associated with potential underground sites and have been instrumental in identifying infrastructure tunnel projects for Brisbane. 5. ARCHIVES STORAGE FACILITY

The capital cost is estimated at $2.03 M for the conceptual 1,820 m archiving facility. 6. SELFSTORAGE FACILITY IN DISUSED QUARRY T h e p r o p o s a l i s f o r a 6 , 0 0 0 m foot print commercial development which provides approximately 5,070 m of lettable area on two levels. 35% of the footprint area remains as rock using a room and pillar excavation method. The area of interest would be an accessible quarry bench, preferably at the lower part of the quarry. Based on ownership by a property developer and a commercial letting arrangement for self-storage facilities and office / retail facilities it is expected that the capital cost of the facility would be $4.31 M o r $ 8 4 9 /m of lettable area. The

TIP proposes a simple excavation (to provide a ground floor plus mezzanine) with a footprint area of 2,000 m or such area as the users justify. Total usable area would be about 1,820 m based on a room: pillar ratio of 0.65:0.35 and 65 % of the available space being storage space after allowing for aisles, loading and working areas. A typical layout (schematic only of the floor) of a two level structure is shown in Figure 1. This

proportion of lettable area to the total available area is 0.65:1, the remaining area being for access, services etc. The Net Present Value (NPV) based on a discount rate of 12.5 % and a royalty payment of $4 /t for aggregate (approx 80,000 t), an occupancy of 90 %, operating expenses of $100,000 /a and a period of 15 years operation is approximately $1.5M Payback based on capital cost and operating cash flow is within 5 years of commencement of the project. The project construction period is expected to be one year (Year 1). The annual rental return as a percentage of capital outlay is 22% approximately. Cash flow could be increased by releasing land allocated for self-storage and infrastructure because these facilities could be located underground. The concept could be extended to include underground water storage. The proposal is both exciting and innovative and offers an excellent return on investment. The proposal offers the property developer an opportunity to provide optimum utilisation of the land available. It is likely that the feasibility, planning and approval process would take up to two years since the concept has not been tested. A typical layout (schematic only of the floor) and section is shown in Figure 2. This shows the portal access (suitable for large trucks), the storage areas (approx 8.5 m wide), and the car parking and car storage area Features of the facility include: A total excavation height of approximately 7.2 m. Allowing for floor thickness of 300 mm and mezzanine thickness of 300 mm, this gives an average clear floor height of 3.3 m. It may be advisable to make the ground level higher (eg 3.7 m) to allow storage of caravans, boats etc. Main accesses are full height to allow for installation of ventilation, services and for the access by large trucks. A lift system is used to transport self-storage items to the mezzanine floor. If necessary, light vehicle access can be provided to this floor via an internal ramp. The overall cost is approximately $800/m2 o f lettable area. This is more expensive than above ground self-storage facilities. Within a 10 km radius of the centre of Brisbane it would be expected that a tilt slab self-storage facility would cost around $600/m2 including land costs. However the comparison of two projects in an old quarry using NPV analysis will indicate little difference in NPV due to the cash flow generated

by the material extracted and the additional land made available for sale. The estimates are currently at pre-feasibility accuracy (30 %). At the next stage of project assessment, detailed costs from contractors could be obtained. There is a considerable amount of interest from civil and mining contractors t o develop an underground commercial development project in Brisbane. Table 2 shows a summary of the comparison of underground and surface construction costs, adapted from data provided by Napier and Blakely (Napier and Blakely, 2001). It is proposed that the facility be run on a low key basis through the use of video cameras for security and day management and after hours access using a key card facility. It is expected that the total operating cost including labour, power, cleaning, rates, insurance etc would be of the order of $100,000 /a. Having a live-in caretaker can reduce operating costs. The concept of using a disused quarry in an urban area has the potential to provide low-medium cost self-storage. The quarry itself could be used for a housing development. Potential uses of the underground space facility in an urban environment include: Self-s t o r a g e a s s o c i a t e d w i t h h o u s i n g development (eg second vehicle, excess furniture, boat, caravan etc). Excess stock storage for retail businesses and local contractors. Light commercial business eg car detailing, courier depot. Car storage. Cold storage facility. The Officeworks complex is interested in constructing an underground room and pillar complex in Brisbane. Total area required is 2,000 m2 plus car parking. There may be an opportunity for a similar concept for other retailing sectors where vehicle access is important. High security storage.

7. LARGE UNDERGROUND COMMERCIAL CENTRE T I P p r o p o s e d a l a r g e-scale commercial development as part of the Roma Street Parklands Project in Brisbane in the mid -1990s (Robertson 1996). The $40M development offered a highly secure low impact development consisting of two underground excavations, each 9 m high and approximately 1 hectare in area, situated one above the other and approximately 5 m minimum below

the surface, right in the centre of the city. The proposal utilised existing heavy vehicle access to Platform 10 the interstate railway platform, as well as providing income for the State Government through leasing of the space. The proposal involved car parking, car storage, self-storage, archive storage, light commercial activities and office, retail and restaurant space in a two level complex. Overall construction cost (excluding land cost) was predicted at $850/m2. Unfortunately the proposal was not accepted in the design for the Parklands, nor was the recommendation by TIP that access be retained for a future underground development, should the p r o p o s a l b e r e-considered in the future. Duplication of the design concept to a major centre, a disused quarry or within the CBD would be relatively simple exercise. Other options involve underground quarrying (Marshall et al. 2000) in an established operating quarry and utilising the void created for commercial purposes. Room and pillar extraction, while costing of the order of $50/t, could be justified if there was value adding of the space created. Other advantages would be improved environmental management by underground crushing and screening, extending the life of the resource (which is constrained by urban expansion) and producing high quality products. 8. WHAT PRICE FOR SUCCESS?

is aware of the problems, often resulting from outdated tunnel designs and ventilation systems, and is promoting the review and refurbishment of tunnels to make them safe. The concept of underground space effectively utilises the fourth dimension of space in our cities, which are currently constrained in the horizontal direction. Recent events in the USA have highlighted a new risk in the third (high rise) dimension. The cost of underground commercial development in the right location (for example an old quarry) can be only 15-20% higher than for above ground development. The margin is reduced when land values are taken into account but is again increased where the cost of access to an underground facility is high. It is important for our city planners to identify good quality rock locations in our cities for future use and to ensure that access to this resource is maintained. Proposals for underground commercial development have not been accepted readily in Australia. In certain cities like Brisbane and Sydney, the rock conditions (especially the Hawkesbury sandstone in Sydney and the welded tuffs in Brisbane) are ideally suited to quality underground excavation. However, while underground commercial development proposals are now being considered as an option by developers, the community and planning authorities, there is always concern with respect to the risks associated with underground excavation. These include cost overruns due to lack of geotechnical data, approval costs and the costs to meet fire standards. 10. REFERENCES Marshall T, Ohsberg M & Robertson A, 2000. Underground Quarrying T h e Aggregate Source of the Future. Paper presented to the Hong Kong Quarry Conference, Hong Kong, 1718 November, 2000. Napier and Blakely P t y L t d , 2 0 0 1 . Construction Costs South East Queensland. Datacard No. 4.3, July 2001. Robertson A, 1996. Cost Competitive Underground Space Development One Solution to Urban Expansion. Paper presented to IX Australian Tunnelling Conference, Sydney, 27 29 August 1996.

Technology developments in rock cutting such as the Australian developed oscillating disc cutter (ODC) technology, the Brandrill penetrating cone fracture (PCF) and the Voest Alpine Icutroc technology will allow mechanised cutting of hard rock in the near future. This will eliminate the problem of blasting in urban areas. In addition, these high performance development machines are expected to lower the cost of excavation and ground support in comparison to drilling and blasting by up to 50% of current costs (eg $25/t v- $50/t or more at present). However, because of the low cost of conventional commercial development, the underground concept will have application only where land area is limited, access is simple and good ground conditions prevail. 9. CONCLUSIONS

Underground space and tunnelling is fast gaining community support despite major tunnel accidents overseas. The International Tunnelling Association

Table 1 Development Cost Estimation Central Archive Storage Facility, 2,000 m2

Quantity Development Dimensions Property Area Floor Area Available Area Archives Volume of Material to be removed Tonnage of material to be removed Development Costs Portal Development (1) Engineering - Design/Geotech Project Management/Approvals Raises Room and Pillar Development Total Development Cost Fitting out Cost Shotcrete Power Distribution & Fans Vent Pour Floor incl Mezzanine Fitting out Cost Total Fitting out Costs TOTAL COSTS Cost/Unit Area Archive Storage (lineal metres) 2000 2600 1820 7800 20280

Unit m2 m2 m 3 m t
2

Factor

Comment

40m x 50m 0.65 (Room and Pillar) 0.70 2.60 6m vertical excavation Density 2.6 t/m 3

$40,000 $120,000 $100,000 $20,000 $811,200 $1,091,200

$ $ $ $ $ $

$40/t

Vent raise 3 $100/m

$280,000 $116,000 $195,000 $227,500 $818,500 $1,909,700 $1,049.29 12, 000

$ $ $ $ $

$80/m 2 $75/m 2 $125/m 2

Walls and ceiling

$/m 2 m

Table 2 Comparison of Above Ground and Underground Commercial Development Costs

ABOVE GROUND CONSTRUCTION COSTS FOR SE QLD MARKET (per sqm) Range (July 2001 inc. GST ) CAR PARKING $50.00 $60.00 CONSTRUCTION COST FOR UNDERGROUND USE OF SPACE SPACE (per m ) Range (July 2001 inc. GST )
2

USE OF SPACE
All costs exclude land purchase cost

CAR PARKING Open bitumen car parking, drainage, linemarking (30 m 2 /car) 2 to 3 storey parking station, concrete structure, no lifts, no mechanical ventilation, no sprinklers (30-35 m /car) Multi storey parking station, concrete structure, lift, no mechanical ventilation, no sprinklers (30-35 m /car) Underground below offices, concrete structure, excavation, lifts, mechanical ventilation, sprinklers (30-35m /car) RETAIL Regional shopping complex - High Standard including major stores, speciality shops and enclosed malls Suburban Shopping Complex Supermarkets and Department Stores with air conditioning, excluding fitout Speciality shops -shell only Enclosed mall area with air conditioning INDUSTRIAL/SELF STORAGE 6m-8m high warehouse - basic standard, metal clad walls, sealer on floor, no sprinklers (up to 5,000 m 2) 6m-8m high warehouse - basic standard, metal clad walls, sealer on floor, no sprinklers (over 5,000 m 2) 6m-8m high warehouse - medium standard, precast walls, sealer on floor, no sprinklers (up to 5,000 m ) 6m-8m high warehouse - medium standard, precast walls, sealer on floor, no sprinklers (over 5,000 m
2 2 2 2 2

$300.00

$410.00

$370.00

$520.00 Underground excavated in hard rock, three storey,mezzanines, lifts, mechanical ventilation, sprinklers (30-

$600.00

$780.00

35 m /car)

$880.00

$1,100

$1,230.00

$1,420.00

$940.00 $580.00 $1,020.00

$1,080.00 $760.00 $1,290.00

$460.00

$520.00

6,000m 2 excavation, mezzanine floor

$660.00

$770.00

$430.00

$480.00

9,000m 2 excavation, mezzanine floor

$610.00

$725.00

$460.00

$560.00

$440.00

$500.00

6m-8m high warehouse - high standard, precast walls, epoxy coated floor, sprinklers (up to 5,000 m 2 ) 6m-8m high warehouse - high standard, precast walls, epoxy coated floor, sprinklers (over 5,000 m 2) Truck Hardstand, 175 RC slab, drainage, linemarking MIXED USE 2 Up to 6,000 m Mix of parking, self-storage, retail. Up to 9,000 m 2 Mix of parking, self-storage, retail. 40,000 m 2 complex Mix of parking, self-storage, retail. $590.00 $740.00

$540.00 $60.00 $810.00

$690.00 $80.00 $980.00 6,000m excavation, mezzanine floor Mix of parking, self-storage, retail. 9,000m 2 excavation, mezzanine floor Mix of parking, self-storage, retail. 2 titles in strata, each 10,000 m 2 with 3 floors in each. Mix of parking, self-storage, retail.
2

$1,040.00

$1,210.00

$780.00

$940.00

$940.00

$1,055.00

$880.00

$990.00

Figure 1 Plan View Archive Storage Facility

40m

Vehicle Access 4.5m

4 m

15m 6 m 6 m

2.5m

6 m

4 m

6 m

50m

7 m

Large Storage

Office 7x10m

Car Parks

Portal access through rock face Insitu ground and support pillars Moving shelves, approx 12 000m Access to shelves Large storage facility Vehicular access (floor level) Vent rise 2x2m to surface

Figure 2 Simplified Views of Self-Storage Facility

A'
40 m Main Access 4m Lift

4m 8.5

50 m Unit Room Self Storage Facility (10 sq m per unit)

Caravan Storage

Lift Car Parks (2.5 m x 4.5 m)

Toilets

Quarry Face Portal Exit Not to Scale Indicates Pillar Quarry Face Pillar Outside Office Office Portal Access

Container storage

8.5m Pillar

7.6m 4m PORTAL Vehicle storage Concrete floors

SECTION A - A'