Welcome back to Sunday reading.
From the Devonport Ferry. If your commute has tourists taking selfies on it then I’d say it’s probably pretty good:
Devonport Ferry ©Patrick Reynolds 2017
Here is a clipping from yesterday’s Herald Commercial Property section. It neatly encapsulates the value of sorting out planning restrictions [Unitary Plan] and making high quality Transit investments [City Rail Link], naturally, given the context, through a property value lens:
I wouldn’t get too hung up on the salesman’s boosterism in the second paragraph, as the main point is that the only way for tatty low value (in the broadest sense) parts of the city, like the current low rise commercial city fringe, to attract investment and therefore improvement is through value uplift. Outside of large scale direct public investment, that is, which is no straight forward business in these kinds of areas. This is happening in other parts of the city, Tamaki etc, but it is very hard to do everywhere, and anyway is probably not desirable as the only means of development anyway. There is a good role for the private sector in city building. The city and its citizens are winners through either this process, after all no one can live in an apartment that doesn’t get built, nor use or work in a retail or commercial property that isn’t there, so more is certainly more in a thriving city.
All transport infrastructure investments provide opportunities for different groups, and after 65 years of only rewarding ex-urban land bankers and detached house volume builders with tax funded transport investments (motorways) it is good to see a better and more efficient urban form being incentivised here.
And particularly good to see both levers, planning code and Transit investment, being pulled at once, and in the same direction. This is absolutely something that Auckland is getting right. Those interested in these city shaping issues globally will know that it is surprisingly difficult to achieve such obvious coordination. The main barriers to this are fractured governance in cities, so we can put this success down to the amalgamation of Auckland’s previously hopelessly squabbling and disunited political organisation, and subsequent weakness in the city’s dealings with the much more powerful central government.
April sees the Waterview tunnels open. Print media is starting to look forward to the project. I see NZTA are already trying to play down expectations of congestion reduction. As well they might:
It is not a means of removing congestion altogether, especially in peak periods, which is no different to other major cities across the world,” Gliddon [NZTA] said.
Perhaps we should be expecting them to spend our money in smarter ways, like on actual alternatives to everyone always driving for example, then?
Plus some thoughts from this fellow:
Here’s a ripper from the ‘surprising things that generate big efficiencies’ department, here:
UPS drivers don’t turn left—and it saves them 10 million gallons of gas a year
If there is one thing I do like about American traffic management in cities is their enthusiasm to restrict cross traffic turning. Left in their case, right in ours. Our agencies seem obsessed with making horrible oversized intersections with individual lanes and light phases for every possible turn, including the most lethal and disruptive of them all; cross traffic ones. I have long called for the removal of right hand turns into and out of most Queen St intersections for both safety and efficiency reasons. And we all know that AT are just plain wrong on this issue in Mt Albert. Note to traffic engineers; heritage isn’t a thing in your profession; just cos you’ve always done it one way it doesn’t you should keep forcing it on us (actually almost certainly the reverse is true).
UPS have moved away from trying to find the shortest route and now look at other criteria to optimize the journey. One of their methods is to try and avoid turning through oncoming traffic at a junction. Although this might be going in the opposite direction of the final destination, it reduces the chances of an accident and cuts delays caused by waiting for a gap in the traffic, which would also waste fuel.
So now there’s evidence that Traffic Engineering has been wrong all along anyway, as the standard argument for keeping dangerous and delaying right hand turns is that to remove any decreases vehicle efficiency. Busted again Traffic Engineering: I sometimes wonder if there is a discipline with less intellectual curiosity about its habits than this branch of engineering?
Note to AT: MacKelvie St/Ponsonby Rd. So often there is broken glass here, being so close to the Richmond Rd intersection right turning both into and out of this street are seriously disruptive, dangerous, especially with the volume of other road users in this busy retail area (and the bus stop). Stop the right -hand turns and the very wide MacKelvie could be narrowed with widened footpaths and street trees on the southern, sunny side, and the road space on Ponsonby currently as a wide painted median for this manoeuvre used more productively.
This is undeniably true: Decisions about transport investments are really about what kind of future city we desire. For a quick overview, with lots of links, of this claim head to this CityMetric article.
The article questions reliance on cost benefit analysis, where as I think that they are an important part of the evaluation process. I guess the issue really is one of balance. For example we have for many decades had far too much priority given to the results of traffic modelling, whereas these outputs should be of a secondary value in city design, not primary. Because if we build for traffic first, all we get is traffic, and much less city.
Thinking City has a nice post up on cultural representations of cities.
Breaking Bad is amazingly powerful drama, but who thought it would also turn out to be positive for Albuquerque? Not the local authorities, for one. But there were wrong:
The funny thing is, even when a place is portrayed in a negative light, it can actually end up having a positive impact on that area. Take the US city of Albuquerque, New Mexico’s largest metropolis, home to roughly half a million people. It is also home to the fictional characters in the hit TV show, Breaking Bad, about a teacher with cancer who turns to drug dealing. Following the success of the show, tourism to the New Mexico city was massively boosted – turning around struggling businesses, generating new ones and contributing hugely to the local and state economy.
From the ‘the whole world is an integrated economy’ file, Bloomberg has the fascinating tale of one tiny widget in a nice interactive, click though to the the link for the full experience:
I have always like the line: ‘California must exist for even America needs an America’.
Immigrant Shock: Can California Predict the Nation’s Future?
So it’s interesting to read an article calling California as showing the direction the rest of the US will follow. Is California just America’s dream of its own future? After all in the long run everything follows demographics; economics, politics…
Thank’s for reading, see you next week…
However you define Auckland’s “city centre”, it’s been adding jobs rapidly in the last couple of years. Based on a narrow definition – roughly, the area bounded by the motorways – the city centre has hit a new milestone of 100,000 jobs, actually reaching almost 102,000 as at February 2016.
Using a slightly wider definition, you could call it 111,200 jobs. This is the definition used by the Ministry of Transport when they were monitoring employment growth in the city centre. More on that below.
Once you get beyond the motorways, which are pretty major barriers, there’s also plenty of employment close to the city centre even if you don’t consider it to be part of the city centre. That includes Parnell, Newmarket, Grafton, Newton, Kingsland, Ponsonby and Freemans Bay. Many of these have rapid transit (rail) connections – even if they don’t, they have good bus frequencies. You can think of this area as the “city centre and surrounds”, and that takes you to 178,000 jobs – a quarter of all the jobs in the entire Auckland region.
Depending on what definition you use, the city centre has added around 5,000 jobs in each of the last two years.
That might not sound like that much, but this is regionally, even nationally, significant growth. Auckland as a whole added 18,000-28,000 jobs a year in the last three years (averaging 23,500). New Zealand added 40,000-50,000 jobs a year over this time. Prior to the last three years, jobs growth was weaker or even negative, as the country struggled with a post-GFC recession.
Overall, Auckland’s city centre is one of the major growth engines for employment in New Zealand. This is set to continue for at least the next few years, with plenty of job-creating developments underway (offices, hotels, the International Convention Centre, the City Rail Link etc).
You might recall that back in 2013, the government was giving very guarded support to the City Rail Link (CRL). They said they’d fund an early start if two very tough targets were met:
- Auckland CBD employment increases by 25 percent over current levels; and
- Annual rail patronage is on track to hit 20 million trips well before 2020.
We were critical of these targets at the time. They didn’t relate that well to the goals of the CRL, and were just arbitrary hoops to jump through, the kind of thing which road projects have never had to face. Plus, they reinforced the false perception that the CRL was all about the city centre, whereas it actually delivers benefits across Auckland.
Fortunately, these targets have now been dispensed with. After hemming and hawing for a few years, the government came fully on board with the CRL in 2016. The former targets are now irrelevant, so what follows is really just for interest.
Matt still covers our progress towards the patronage target from time to time. Auckland is surging towards 20 million rail trips a year, hitting 18 million in 2016. We’re on track to hit 20 million by the end of 2017, although it might end up being 2018.
The employment target was much trickier, partly because it was so badly defined. The government’s initial announcement of the targets didn’t define the CBD, or the timeframe over which employment was meant to grow by 25%. See this post, which links to two earlier ones, for details.
For what it’s worth, I think the fairest interpretation of the government’s target – based on the City Centre Future Access Study which they based it on – was to use 2006 as a base year, and the “narrow definition” of the city centre I’ve used above. That wasn’t the interpretation they went with – they took a much tougher line – but it would have been the fairest one.
Anyway, city centre employment was 81,200 in 2006, and 101,900 in 2016. So we’ve actually grown by 25% already based on that, and there’s a strong growth trend continuing. The government eventually decided on a tougher (and I think less fair) interpretation of their target, but even then we would probably be on track to hit it. They used 2012 as the base year, and the city centre has grown by 13% in the four years since. Keeping up that rate of growth, we’d hit 25% by 2020.
So, for what it’s worth, even though the government targets were arbitrary, and incredibly hard to hit, it looks like we’d be hitting them anyway.
All in all, it’s a bloody good thing the CRL is now under construction, even if we’re still going to have to wait another 5 or 6 years before it opens – it’s the only thing that will let the city centre jobs engine keep purring.
Ian Reynolds 1946 by Brian Brake
My father, Ian Reynolds 1922-2005, was an architect (as was my mother). He was also a what was then called a Town and Country Planner. After returning from working in England after the war he spent the rest of his career as partner in a big multidisciplinary practice in Auckland (missing the city of his youth: Wellington. Office in Wakefield St, where the AUT business school is now). There he was responsible for a chunk of our post-war modernist heritage, as well as a lot of planning work. Especially at the University of Auckland, master-planning the campuses and involved in the campaign to retain the city one, which thankfully won out. Notable design work includes the School of Engineering and the Thomas Building both on Princess St, his practice also designed the School of Architecture while he was head of the architectural division.
In 1967, which is of course now 50 years ago, he was interviewed by the Herald about transport in Auckland (in full below). And it makes for a pretty interesting read, surprisingly relevant still, perhaps alarmingly so. I’m pretty sure his 1967 self would be very surprised that we are only now getting round to building the Rapid Transit Network he describes from the De Leuw Cather report. Although later of course he witnessed the defeat of Robbie’s Rail, and much else that should have given life to the 1960s plans for balanced transport networks. The interview shows a clear vision of that possibility, and how that would have led to a different more urban pattern of development for Auckland than we currently have:
Readers will no doubt feel that indeed; some apples don’t fall very far from the tree, yet re-reading this I am amazed now at how little I ever discussed these issues with Ian. I think on his side that was because of a sorrow felt by the idealistic modernists of his generation about the development of Auckland in the later part of the last century. Interestingly for many there was a move into environmentalism from urbanism (not that either phrase were current at the time) as centrally directed motorways and private land speculation took over completely from state planning and housing investment. Perhaps that is where this generation’s lasting legacy can be seen. Especially evident in the careers of two of Ian’s colleagues; captured perfectly in this obituary of planner FWO Jones (known even to us kids as ‘Fwo’) and the just recently deceased KRTA partner Dave Thom, who was very active in the national parks programme, and in making the theoretical case for environmentalism as a core practice of engineering internationally.
But it must be remembered that the denser city was always considered the necessary corollary to the protected wilderness, as this keeps the city from spreading so much into the country. The term sprawl is after all the shortened version of urban sprawl. His generation did achieve much in protecting key wild places, but I think Ian keenly felt that on urban form they suffered a life long defeat. So it would be good to show him Auckland now, the last ten years since his death have seen a profound change. I think he would be gratified by many of the trends; the full return of the university to the city, the strong revival of inner city living (though not so much the design of many of the buildings), the rail revival (he was a dedicated train user; taking the overnight train to Wellington regularly instead of flying, which he loathed, he was also an equally dedicated pipe smoker; which got him in the end).
There is so much that is still accurate in the document, both happily and otherwise, I think he is right both about our relative lack of corruption and waste, but also the dominance of political expediency over good policy in transport and urban form:
Here he refers to the ‘Morningside Deviation’ the 1940s version of the CRL suffering the same fate (see here for earlier schemes):
It is important to remember that at the time of the interview the population of Auckland was around half a million, so the arguments then are even more pressing now there’s another million souls living here. And some concerns have disappeared completely, such ‘inner city decline’. Of course had the described bus/rail system been developed alongside the motorways the pattern of the city’s development would be different; less sprawl, more complexity, not radically different just less monotone. A city of greater variety and one less entirely dominated by traffic. One that pushes less aggressively into the surrounding countryside… Instead we have built one network entirely, the motorway system, and largely one developmental typology, low density dispersal, and the city is poorer for it. And now we must urgently add the missing complementary Rapid Transit Network, as those 1960s planners quite correctly foresaw would be required to prevent a road only system choking to death on its own overuse. At least as the city is three times the size it is so the cost is now affordable; if only we would stop so expensively adding to the one now complete system….
Sketching in Kendal 1950
There was a good article a few days ago by Brent Toderian in Toronto’s Metro News highlighting that if you use the “math of city-making”, which is often at odds with the way cities have developed over the last 60+ decades, you can build a better city. Brent has visited Auckland a few times to work with the council on planning issues and has talked at a number of Auckland Conversations events including here in 2013 and here a year later.
Here are some of the examples he uses in his article.
- A common political argument is that bike and transit riders should “pay their own way.” A study in Vancouver however suggested that for every dollar we individually spend on walking, society pays just 1 cent. For biking, it’s eight cents, and for bus-riding, $1.50. But for every personal dollar spent driving, society pays a whopping $9.20! Such math makes clear where the big subsidies are, without even starting to count the broader environmental, economic, spatial and quality-of-life consequences of our movement choices. The less people need to drive in our cities, the less we all pay, in more ways than one.
- Another study in Copenhagen (where the full cost of transportation choices are routinely calculated) found that when you factor in costs like time, accidents, pollution and climate change, each kilometre cycled actually gains society 18 cents!
- A recent American study suggested that compact development, on average, costs 38 per cent less in up-front infrastructure and 10 per cent less in ongoing service delivery than conventional suburban development, while generating 10 times more per acre in tax revenue. Many cities overbuilding the suburbs are putting their fiscal future at risk — and that’s before the bigger picture costs are even included.
- Over the last decade, Canadian cities like Calgary, Edmonton, London, Halifax, Regina and Abbotsford have been doing the hard math on the real costs of how and where they grow — not just up or out, but how smarter design choices save costs. The resulting math has been powerful — tens of billions of dollars more of public cost for car-dependant suburban growth than for smart infill — and I haven’t even yet seen such a study that includes all the full and life-cycle costs of our growth choices. Once these shocking numbers are revealed, municipal leaders can’t “un-know” them, no matter what political ideology they live by.
Want more examples? There’s math showing that replacing on-street parking with safe, separated bike-lanes is good for street-fronting businesses. That crime goes down as density goes up. That providing housing for the homeless actually saves public money. That you can move more people on a street when car lanes are replaced by well-designed space for walking, biking and transit.
There are of course many others we’ve seen and covered over the years, including many local studies that have shown the same results as above. Do you have any city math favourites?
Auckland is a very leafy city. The trees that our forebears planted have slowly grown to maturity, resulting in many streets and suburbs with an attractive amount of greenery.
The city’s street trees are especially valuable… where they have been allowed to survive traffic engineering standards. For instance, there’s an immense difference in the look and feel of different parts of Symonds St. Areas around the university, with abundant, mature trees, feel much better than the concrete channel near the Wakefield St intersection.
But will development of taller buildings in residential neighbourhoods – three-storey townhouses and midrise apartments – erode Auckland’s leafiness? Will the buildings slowly grow above the trees, resulting in a landscape of roofs rather than a landscape of trees?
Evidence from other cities suggests that the answer is no. For example, Stu Donovan tells me that in Amsterdam street trees still rise above the midrise apartment blocks, creating leafy vistas.
To understand what might happen in Auckland as the city grows up, I’ve taken a look at the height of common street trees in New Zealand cities. Unfortunately, data on street trees in Auckland wasn’t easy to come by, but a PhD thesis by Fredericke Behrens provides some data on the abundance of different types of street trees in Christchurch. (“Selecting public street and park trees for urban environments“, Lincoln University, 2011)
Here’s a list of the ten most abundant street trees in Christchurch (Table 5-2 in the thesis), along with approximate mature heights (generally sourced from Wikipedia). Eight of the ten species have mature heights in the range of 15 metres or more, while three can grow up to 25 metres.
These species will generally be of a similar height as mid-rise apartment blocks, which may be in the range of 4-7 storeys high. Silver birches or ribbonwoods on the street can be attractive complements to medium-density development.
|Betula pendula (silver birch)
|Quercus palustris (pin oak)
||around 6 storeys
|Fraxinus ornus (manna ash)
|Plagianthus regius (ribbonwood)
||up to 17m
||around 5 storeys
|Cordyline australis (cabbage tree)
||up to 20m
|Liquidambar styraciflua (sweetgum)
|Prunus cerasifera ‘Nigra’ (black cherry plum)
|Sophora tetraptera (kowhai)
||up to 15m
|Quercus robur (English oak)
|Prunus x Kanzan (Japanese cherry)
Furthermore, this list doesn’t include several less common species that play an important role in Auckland’s landscape, such as the London Plane tree, which usually grows to 20-30m (6-8 storeys) or even higher in exceptional circumstances:
Or the city’s many Norfolk Pines, which often stand out at a distance due to their conical shape and mature height of 50-65m:
Or the spreading pohutukawa, which can grow up to 25m (7 storeys):
In other words, it seems like we shouldn’t fear for Auckland’s leafiness: We can develop a lot more without eclipsing our trees. But that being said, I would argue that we need to do other things to preserve and improve our streets as we develop… such as planting more street trees.
What do you think about street trees in Auckland?
2016 has been a big year for development, and by “development” I mean the process of getting new homes built, or any other new buildings for that matter.
In the last “development update” post for the year, I wanted to look back at some of the highlights which you might have missed. You can click through to these at the bottom of the RCG Development Tracker page.
- January focused on retail. “Up until 2007, the retail sector was on a roll, and new shopping centres were being built all over the place. That changed when the recession hit in 2008 [but] 2015-2016 sees the biggest expansion since the GFC”.
- In March, I covered some research I did with RCG, and some other housing stuff. “In the long term [attached homes will] make up at least 50% of the new homes we build”. I’ve picked that in 2017, we’ll consent more of those than detached houses. Will we get there? Hard to say at this point.
- June was all about housing. I looked at the pipeline for ‘attached dwellings’, which I’ll update in the new year.
- July compared construction trends for Auckland and Christchurch
- August focused on Stonefields, a 2,500-home development. “Looking at Stonefields today, you could be fooled into thinking it’s almost finished, but the reality is it’s not even halfway”.
- September covered office development across Auckland (most of it is in the city centre)
- November looked at some of the housing projects which haven’t gone ahead, for various reasons.
Tracking housing and other projects
The RCG Development Tracker has an interactive map, now showing 827 projects across the country, including every brownfields Special Housing Area, big growth nodes like Hobsonville Point and Stonefields, plus billions of dollars’ worth of retail, office and accommodation developments.
It also shows Auckland’s Rapid Transit Network – the trains, the Northern Busway, plus some new links which will be built in the next few years such as the City Rail Link (now thankfully underway) and AMETI busway (which continues to languish). The Northwestern busway isn’t on there, as it’s even further away and doesn’t have any funding yet.*
In Auckland, we’re building some of everything. Shopping centres, offices, industrial buildings; hotels and other accommodation; and of course homes of all types and sizes. Apartments, terraces, retirement villages, and “traditional” detached houses (more on those later). Just about everything is booming. This year I’ve written on the tourism boom, migration boom, international education boom and construction crunch (which is really a boom as well).
So those are all positive, I guess, but there are issues that come with them. The big issue being a shortage of housing, with real effects on people’s quality of life. Other issues being high construction costs, and what looks like low wage/ productivity/ real income growth (so we’re not that much better off on a ‘per capita’ basis). Plus, there are some wobbles starting to emerge: house prices flattening or starting to fall, and signs of real problems in the international education industry.
How many homes are we really building?
Most months, I put together a graph showing the number of building consents for new homes. This is a good indicator of how many homes are going to be built. By the time a development gets its building consent approved, it already has planning approvals, and the design is pretty much complete. The developer has 12 months to start building (otherwise the consent expires), and almost all consents do eventually turn into homes.
Here’s the latest consents data, which shows that 9,800 new homes were consented in the 12 months to October 2016:
There’s obviously a lag between building consents being approved and the home being completed. Historically, the average lag is about six months, but this lag is getting much longer. Only 7,700 homes were completed in the 12 months to June 2016, but 9,251 homes were consented in 2015, and 7,632 were consented in 2014.
So, consents do get converted into homes, but we’re well behind on doing it.
Why the delays?
There are two reasons for the delays. One is that builders everywhere are busy, so they’re struggling to put enough resources together.
The other reason is that apartments take longer to build than terraces, and terraces take longer to build than detached houses. As Auckland builds a larger share of attached dwellings, the lag between consents and completions would be getting bigger even if builders weren’t flat out. At a guess, we probably need to allow at least two years for apartments from consent to completion, and at least one year for terraces.
So does that mean that we need to build more detached houses if we want to solve Auckland’s housing crisis? Surprisingly, the answer is no – in the long term, we’ll get more homes built if we focus on attached homes, like apartments and terraces.
There’s nothing very traditional about the detached houses being built today. They average a whopping 235 square metres – what is that, six bedrooms? – and they’re often double storey, with complicated shapes compared to the brick-and-tile boxes of the past. Plus, they’re mainly on the edges of the city. Affordable housing they are not.
Apartments and terraces, of course, tend to be much smaller in size. Although they cost a bit more to build on a ‘per square metre’ basis (especially for apartments), they tend to be cheaper overall.
And on that note, have a great summer everyone, take care when getting around and remember to wear sunblock!
* Motorways aren’t shown; they get enough attention already. Suffice it to say, the government is widening pretty much any motorway they can, and trying to put new motorways anywhere they can, and the costs are never questioned.
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.
Last week I was in Brisbane for work. There seem to be quite a few cranes around the city, including midrise apartment developments creeping along the riverfront to the west of the city centre. The Brisbane CBD proper is still quite sterile at night after all the office workers have left – it’s an absolute pain in the neck to try and find dinner. But it seems to be developing little live-work satellites along the side of the river.
Transportblog kept an occasional eye on development trends over in Australian cities as a sign of what could happen in Auckland. (If urban planning rules and the development sector were geared up for it.)
New data suggests that Australia’s apartment boom is paying off: Prices are levelling off and potentially even falling, and city centres are becoming increasingly vibrant around the clock due to an upsurge in residential population.
However, the odd thing is that this success story is being reported as a bad thing by Australian journalists.
First, Jonathan Pearlman (The Straits Times) warns that an “apartment glut looms in major Aussie cities“:
In the two largest cities of Sydney and Melbourne, high prices and strong demand for properties in the inner city or near railway stations have led to a dramatic shift away from houses to apartments.
The central bank and analysts have warned of a looming “apartment glut” which could deflate the nation’s soaring property market.
Economist Shane Oliver from AMP Capital told The Straits Times that apartment prices in parts of Sydney and Melbourne are likely to fall by about 15 to 20 per cent over the next two years.
The falls could cause a broader decline across the market, even though some areas, especially in Sydney, still have an undersupply of housing.
“We have a huge spike in supply of apartments over the next couple of years, often in fairly concentrated areas,” he said. “It will cause an indigestion problem.”
This seems like an excessively negative spin. Personally, I would describe this as “improving housing affordability” rather than an “indigestion problem”. But regardless of how you describe it, it does seem clear that building lots of apartments can improve affordability. (As it seems to have done in the Auckland city centre.)
Second, Michael Bleby and Nick Lenaghan (AFR) say that “things not so great when you go downtown” in Sydney and Melbourne. Again, this seems like a good-news story being spun as bad news:
Neither Sydney nor Melbourne is the old-fashioned post-5pm ghost town it once was – when Australia’s army of office workers deserted its day time environment en masse for homes in the suburbs.
The country’s two largest CBDs are now thriving residential centres. People walk their dogs, buy their groceries and exercise on streets that just decades ago were limited to suit-wearing, white collar employees.
“You couldn’t have envisaged this, given our suburban history and the fact that the city just died at night,” says Sydney Lord Mayor Clover Moore. “Australia’s grown up in the last couple of decades.”
That change in Sydney and also further south, in the Victorian capital, marks a huge turnaround. The problem is, it’s too successful. A city can’t thrive on residents alone. It needs workers – preferably highly paid ones – in industries that make the city a place people want to go to.
We’ve also seen this in Auckland. Unprecedented and unexpected growth in the city centre population has led to a downtown revival: More people, more restaurants, more street life. This is a basically good thing, as it means a city where people can get more of the things that they want.
However, perhaps it’s possible that things can get out of whack – that development can tilt too far in one direction for a while, and “crowd out” other uses. The problem is that the “solutions” proposed in Melbourne and Sydney are likely to make the problem worse. Take this for instance:
In Melbourne, the state government has introduced plot ratios to rein in the extent of development on each site. In a bid to swing the balance back toward commercial space, developers can win additional height if they provide a “public benefit” which, oddly enough, these days includes office space.
[…] The sort of tenants that global cities are seeking to attract – the offices of global corporations that in part sell themselves to their own customers based on their prime global footprint – won’t just swap the CBD for somewhere nearby, Rawnsley says.
“If they can’t find a home in the Sydney CBD or the Melbourne CBD, they’re not going to go Box Hill or Parramatta, they’re going to Singapore or Shanghai or Tokyo or Seattle,” he says.
If a lack of office space in the city centre is driving economic growth and productive firms to locate in other cities instead of Melbourne, restricting the size of buildings in the Melbourne city centre will almost worsen the problem, not improve it.
What do you think of the news from Australian cities?
I’ve just updated the RCG Development Tracker for November – it’s now got almost 800 developments listed, across all property sectors but with a focus on higher density residential.
The ones which didn’t make it
In the last month, we’ve had a bit of media coverage about developments being cancelled. It’s always sad when a project doesn’t proceed, especially for first home buyers who put down deposits, and were looking forward to owning their own home. They’ll get their deposit back, but in the meantime property prices have kept going up, and their plans for moving home are disrupted.
Unfortunately, developments being cancelled (or put on hold, or reworked) is not new. No development is a sure thing, and some won’t go ahead, despite the glitzy marketing and the flowery statements from real estate agents. It’s part of a healthy market where some things work and some things don’t.
CBRE summed this up well when they said that cancellations boil down to “developers launching the wrong project, at the wrong place, at the wrong price”. I’d add “wrong time” to that list – some projects might have worked if they’d been a bit earlier or a bit later – but it underscores that projects can fall over if they don’t have all the right ingredients.
CBRE counted 31 apartment projects which have been shelved since 2013, making about 15% of the total launched since then. Many of these were well covered in the Herald. As a few examples:
- Flo Avondale. The cancellation of this one sparked the media look at other stalled developments;
- Springpark, which had a troubled history over the last few years. The property was sold and has now emerged as Richmond, with a different developer and with a different plan for the later stages;
- Mt Richmond Mews, cancelled earlier this year;
- Soto Apartments, marketed for a while in 2013-2014;
- The Grove in Albany. This project was marketed from 2013 onwards, and didn’t actually have resource consent. It was eventually consented for 50 homes, rather than the 65 proposed. The property was sold in 2015 and has re-emerged as Verdant Lane;
- We’ve also had the case of the Rose Garden Apartments, which are well under construction, although they’re taking much longer to build than initially expected. Here, the original off-the-plan purchasers have been asked to agree to higher prices than what they signed up for, or have their contracts cancelled. It’s a sad turn of events, and can’t be good for buyer confidence. It’s even more surprising in this case, given that Rose Garden is stage one of a multi-stage development;
- Going back to 2014, there was “Xanadu”, which adopted the unusual marketing technique of being an over-50s complex. A new developer took over, and put together new plans for the site, now known as Union Green.
There are also cases where the developer has had to take a more cautious approach – scaling back their plans, or pulling a project off the market to wait for a better time. Some examples are 88 Broadway and Orakei Bay Village, both by Equinox Group. At 88 Broadway, Equinox was planning to demolish the existing building on Broadway for a large master-planned development. They then decided to retain the building instead, and have refurbished it for offices and retail. At some point, new plans will presumably emerge for the rest of the site.
At Orakei Bay Village, apartment plans have been put on hold for now, and some old buildings are being refurbished for retail tenants. Putting some work into existing buildings is a lower cost, lower risk development option. It’s like a mild form of land banking: the developer gets a bit of a return off the property, but in the long term they’ll expect to demolish the buildings and put something more substantial there. Ponsonby Central and City Works Depot are also examples of this.
But it’s not all doom and gloom, far from it. New housing projects keep getting announced, and there will be many more to come. Like the ones that came before, developers (and buyers) will have to take their chances as to what goes ahead and what doesn’t.
In many cases, the new launches show the Special Housing Area programme finally bearing fruit – projects like Fabric Of Onehunga, The Victor (Browns Bay) and Station 580 (Kingsland) are all SHAs. They join a large number of SHA projects which are already on the market, with some under construction.
Hypatia, in the second tranche of SHAs and (I think) the first apartment SHA to begin construction, back in Feb 2015. Image source: Bracewell Construction
We’re seeing the first signs of construction on other projects, too. This often starts small, by demolishing existing buildings or doing some earthworks. There’s also a large number of projects which are well underway, unremarked by the media but well covered in places like Skyscrapercity, where builders just keep plugging away towards the eventual completion.
As another sign of what’s coming up, here are the latest figures for building consents. The middle of the year was quite flat (i.e. no growth in consents vs 2015), but that’s coming back up again now.
In total, 9,960 homes were consented in Auckland in the last 12 months. That annual figure should hit 10,000 for 2016 – a bit of a benchmark, and also one of the targets in the Auckland Plan.
The Auckland Plan aims for Auckland to build 400,000 homes in 30 years, or about 13,000 per year. However, it recognised that it would take time to reach this level, and assumed that we’d average 10,000 per year in the first decade (2012-2021). We’re finally hitting that, halfway through the decade, so there’s obviously still a lot of scaling up to do. The target for the second decade (2022-2031) is 17,000 homes a year…
We’ve long been concerned about the East-West Link, from the when it was suddenly catapulted out of nowhere from not even being on long term plans straight to being one of the city’s top transport priorities, to effectively becoming one of the governments Roads of National Significance.
From its increasingly eye-watering cost that has ballooned from around $600 million just a few years ago to over $1.8 billion, more than the cost of the Waterview tunnels and without a skerrick of concern from the media, to the fact cheaper and effective options stack up even when compared against those original construction costs.
And of course from when it was planned to plough through houses in Mangere severing communities, to filling in large swathes of the Mangere Inlet, severing pleasant access to the water – unless you like having an expressway next to you – and impacting on future development in and around Onehunga.
And that last point is important Onehunga is an area where Panuku Development Auckland – the city’s urban redevelopment agency who have had huge success with Wynyard Quarter – had picked as one of their key areas to focus on saying:
Onehunga’s strategic location on the edge of the Manukau Harbour, 10km from both Auckland’s CBD and Auckland Airport, makes it ideal to prioritise as a development location.
Panuku Development Auckland will use its land holdings in the area, including the Onehunga Port in the future, to enable developers to build high quality, mixed styles of housing close to the town centre, public transport and the water’s edge.
We’ve raised the issue of the East-West Link and its impacts on development in many posts in the past and now it finally seems to confirmed with the Herald reporting on Friday:
A plan is being drawn up to sell land earmarked for a waterfront development on the shores of the Manukau Harbour for a new motorway.
Political sources have told the Herald that council bosses have dumped a plan for Panuku Development Auckland to buy the Port of Onehunga wharf to develop along the lines of Wynyard Quarter.
Instead, the land will be sold to the Transport Agency for a new $1.8 billion east-west motorway between Onehunga and Mt Wellington. When the agency has used land it needs, it will sell the remainder to Panuku for development.
“It’s going to make life easier for the transport agency, which is good for them, but not good for Auckland,” said one source about plans for a waterfront village, apartments and commercial uses at the wharf.
Another source said the deal will “shaft the good folk of Onehunga”.
The plans we’ve seen to date show the impact on the Onehunga port site is significant. It will effectively be an island, cut off from the rest of the area and difficult to access. Furthermore, having trucks and cars thundering along at speed is simply not conducive with trying come up with trying to develop the area into a people friendly space.
Here’s an image of what the design could look like, also showing significant impact on the Hophua Tuff Ring and areas north of SH2o.
It’s crazy that in 2016, given all the knowledge that society has gained in recent decades, that we’re still even contemplating building such a massive road along the foreshore like the NZTA are.
The Herald carries on, quoting Jim Jackson of The Onehunga Enhancement Society (TOES):
Jackson said the port was the key to unlocking the Manukau Harbour and it had to be done properly. The fishing industry was interested in taking the area over and Panuku wanted to cover it in apartments, he said.
About $1.8b was about to be spent on the east-west link and no-one knew how it was going to connect into Onehunga. The transport agency had consent for a $25m pedestrian bridge and no idea how to connect it into Onehunga, plus there were environmental sediment issues, he said.
Panuku did not have the management skills to oversee development of the port area, said Jackson, who said he had only just been informed of the plan by transport agency highways boss Tommy Parker.
Wait, so the people behind the internationally award winning redevelopment of the Wynyard Quarter have no clue about redeveloping a port area? TOES were key in pushing for the great new foreshore redevelopment on the western side of Onehunga which they pushed as mitigation for the motorway being built through the area decades ago. Unfortunately, the experience seems to have affected them as they have been supporters of the East-West project in the hope getting more mitigation out of it to fix the trashing of the inlet in the past. Pushing for a motorway just so you can fix environmental issues is a completely backwards approach.
The new Onehunga Foreshore
And TOES solution for the East-West is even crazier than the NZTA’s, calling for an even bigger road complete with tunnels and new bridges across the harbour.
Given everything it almost feels like it would be more honest if we just went for the Dutch solution, close the inlet off completely and pump it out and create 5.8km² of developable land. Note: I’m not actually saying this should happen.
Of course all of this new roading development is at a time when many people and officials believe two transformational changes could revolutionise transport in the next few decades.
- Dynamic road pricing that can be used to ensure existing roads stay clear and likely avoiding the need to build many of the big roading projects currently on the plans. What’s more some of the biggest proponents of road pricing in NZ are the business and infrastructure lobby groups who have been key in pushing the East-West Link.
- Driverless vehicles are likely to be adopted by the freight industry faster than other areas involving transport and if the hype is correct, will remove many of the barriers and costs associated with moving goods thanks in part to being more efficient. That could render investments like pointless.
At what point to we stop ceding the city to the whims of the NZTA?