Precinct Properties have just released their annual results, and there are some interesting updates on the Downtown Shopping Centre and other projects.
Downtown Shopping Centre
According to Precinct, they’ve completed the master plan for the development, although this hasn’t been publicly released as far as I’m aware. They say:
The completion of the Downtown Shopping Centre masterplan was a milestone for the project and the company alike… Precinct now has a more comprehensive understanding of this unrivalled opportunity and has been able to better ascertain the scale, scope and overall cost of realising its potential.
As a result it has also revised its expectation for development spend estimates to between $400 and $500 million, reflecting a scheme that will maximise the opportunities offered by the site. This revised guidance compares with $300 to $350 million provided last year and comes after increasing the potential area to be developed.
That’s an encouraging sign, and Precinct now think they’ll end up with around 20,000 square metres of retail NLA (net leasable area), and 35,000 square metres of office NLA. The total gross floor area of the building will be around 71,000 square metres.
Additionally, Precinct’s negotiations with the council to enable CRL tunnels through the site are “significantly advanced”. They go on to say that “while a final agreement has not yet been signed, both parties are committed in principle to a solution whereby construction of the tunnels for Auckland Council will occur as part of the Downtown Shopping Centre redevelopment”.
As for the next steps:
Following masterplanning Precinct has entered the concept design phase. A select group of leading global architects was invited to submit proposals for this phase. Following a series of workshops and presentations NH Architecture from Melbourne was appointed as the retail architect and Woods Bagot based out of San Francisco was appointed as the commercial architect. Local New Zealand architecture firm Warren and Mahoney will ensure the integration of these schemes.
In their actual annual results presentation, which is a bit bullet pointy, they add:
- Intention to restore Downtown and lower Queen Street as the heart of Auckland City
- Leverage public transport as the site is bordered by rail, ferry and bus services
- Precinct will have 5 office towers with around 12,000 workers amongst 130,000sqm of office space
- Retail will knit the precinct together and provide;
- Amenity for office users
- Major city centre retail for Auckland
- Access for public transport
In regards to the “5 office towers” bit, note that Precinct also owns Zurich House and HSBC House, essentially the entire block that the Downtown Shopping Centre sits on, except for the council-owned Queen Elizabeth II Square. Across the road, they also own the AMP Centre and the PwC building. No doubt this will allow for some more wide-ranging master planning.
Source: Precinct Properties 2013 annual results
Precinct have also given an indicative timeframe for the development. They aim to lodge their resource consent in December this year, and from then on it’s:
- Project commitment Q4 2015
- Commencement Q1 2016
- Retail completion Q4 2018
- Office completion Q2 2019
Precinct also talked a bit about their involvement in the Wynyard Quarter, although we’ve covered most of this previously.
In the period Precinct entered into a development agreement with Waterfront Auckland. This provides the opportunity to develop the commercial office property within Wynyard Central at Wynyard Quarter in Auckland. The 46,000 sqm of gross floor area is expected to be built over 5 stages and several years.
Precinct is making good progress on the design and commercials for the first stage of Wynyard Central. This site provides Precinct with the last remaining commercial waterfront development site and complements the Downtown Shopping Centre opportunity.
They do mention, though, that the first stage will involve around $50 million of spending, with the project getting underway in the second quarter of 2015 and wrapping up in the third quarter of 2016.
Lastly, Anne Gibson, the Property Editor at the Herald, recently did a video interview with the CEO of Precinct Properties, Scott Pritchard. Here are a couple of interesting quotes from the interview:
“We think that the way Auckland is going… there’s a significant growth in the number of CBD-based employees… we’ve seen vacancy levels reduce quite radically”
“Getting density into cities is what makes cities so great”
“We’ve seen 10,000 new workers come into Auckland’s CBD in the last three years, which is an enormous amount of people, that need desks. And so… the vacant space of a few years ago has truly been absorbed, and I think if it continues, we’re going to be short on space”
These are a lot of the things we discuss on the blog, and it’s great to hear them coming from the CEO of a major property company.
A few weeks ago I wrote a brief post talking about how the CBD employment targets the government has set for the City Rail Link and how they will be basically impossible to achieve due to a shortage of office space. I’ve also talked about both the office target and patronage targets a number of time in the past.
Last week Jason Krupp from the NZ Initiative wrote an opinion piece for Stuff talking about us and how the targets are justified and questioning the need for the CRL.
Recently, Transportblog.co.nz bemoaned the fact that Auckland CBD was running out of office space.
The pro-transit and compact city advocacy group is concerned because central government is insisting that certain rail usage and CBD employment targets be met before it co-funds the $2.9 billion City Rail Project.
These targets include the doubling of rail patronage to 20 million trips a year, and lifting the number of people employed in the CBD by 25 per cent (or 22,000 jobs) if the city wants the project to start in 2020.
The problem is that while the first target might just be achievable (there were 11.4 million rail passenger trips for the year ending June 2014, up from 10 million in the previous year), the second is more doubtful.
Transportblog.co.nz (and Auckland Council) seem to be suggesting the employment target is unreachable without the City Rail Link. After all, who would want to construct an office building if you can’t fill it with productive workers?
It is a persuasive argument, but it doesn’t quite stack up when you look at the complexities of transit investments and the track record of transit projects.
It goes on discuss some of these points and a few others in more detail. Seeing as he was specifically addressing us with his op-ed piece we felt we deserved a right of reply which Stuff have published. The piece was put together by our three
musketeers economists John, Peter and Stu. Due to word limits on Stuff it’s difficult to even get half of what we want to say in an op-ed but what we did say is below.
At TransportBlog, we want Auckland to be a more connected, vibrant, and prosperous city.
So it came as a surprise when Jason Krupp of the New Zealand Initiative authored an opinion piece criticising our analysis of the need for the City Rail Link (CRL).
Mr Krupp suggests that Auckland should delay or perhaps even cancel the CRL. We disagree: the CRL is critical infrastructure which has already been subjected to considerable scrutiny, especially when compared to most other major transport projects in New Zealand’s history.
Construction on the CRL needs to get underway in 2016 lest Auckland’s growth is stifled.
Auckland’s transport future will be rather different to its past.
Auckland is competing for human and monetary capital with cities that benefit from efficient public transport networks.
The four largest cities across the ditch – Melbourne, Sydney, Perth, and Brisbane – all built CRL equivalents decades ago.
Because those cities unlocked more capacity from their rail networks, they can move more passengers free of congestion.
Rail networks in Perth and Brisbane – cities less dense and not much larger than Auckland – each carry more than 50 million passengers a year.
We should take a lead from what’s worked in Australian cities, which benefit from better mobility and easier access to jobs and services.
Mr Krupp incorrectly suggests that there is a debate over whether the CRL should happen at all. Fortunately, all major parties now agree that the CRL is necessary – but they disagree on the start date. Auckland Council and the major opposition parties have publicly committed to a 2016 start for construction.
A National-led government, on the other hand, would fund the CRL no earlier than 2020 unless two targets are achieved first.
The Government proposes to delay the CRL unless rail patronage reaches 20 million trips a year by 2018 and employment in Auckland’s city centre grows by 25 per cent by 2017.
We are concerned about the arbitrary nature of these targets. The employment target, for example, ignores the role the city centre plays in meeting growth in residents, tertiary students, and visitors.
It’s also unclear why targets have been set for the CRL but not for other major transport projects.
The Government’s criteria also seem to avoid more obvious “value-for-money” targets, such as the benefit-cost ratio.
Nonetheless, we believe that Auckland is capable of achieving the Government’s patronage target, although it’s a stretch.
Since the development of Britomart, Auckland’s rail patronage has grown at double-digit rates, rising from around 2 million annual trips to almost 12 million in a little over a decade.
There’s no reason we can’t meet or exceed that performance over the next decade given the ongoing introduction of electric trains; a better, more frequent bus network; and integrated ticketing.
Auckland’s revitalisation of public transport has been one of its major success stories over the last decade.
Investments in new infrastructure and services have paid off: Britomart, the Northern Busway, the Onehunga Line, and the new Panmure station have all outstripped initial projections. Britomart surpassed its forecasts more than a decade early.
The CRL is a sensible response to proven demand for rail services.
Without completing the “missing link” between Britomart and the Western Line, we will soon hit a capacity constraint – full trains, too many buses in the city centre, increasingly congested roads and reduced economic development.
On the other hand, the Government’s employment target for the CRL is unrealistic to the point of being nonsensical. Simply put, a 25 per cent increase in city centre employment by 2017 is physically impossible.
A recent independent report by PwC found that the central city won’t have enough office space to house these extra employees, given current low office vacancy rates and the time lag in developing new offices.
Moreover, much of the development required to get close to this target is contingent on the CRL. The redevelopment of the Downtown Mall, for example, won’t proceed without it.
Which begs the question: is this target reasonable, or is it simply a delaying tactic?
The Government’s targets and much of the media coverage on the CRL give the impression that the project will only benefit the central city. That’s patently not the case.
Auckland has 120 kilometres of rail lines that move people to and from Manukau, Newmarket, New Lynn, Middlemore, and many other stations as well as to Britomart.
Building the CRL will enable Auckland Transport to increase the speed and frequency of services across the entire network, and possibly expand rail to the North Shore and the Airport.
Carrying on without the CRL would be like building the motorway network without the Central Motorway Junction. It just wouldn’t make sense.
As firm believers in evidence-based policy, we welcome the degree of scrutiny on the CRL. The evidence compiled by Auckland Council, Auckland Transport, and central government is not only comprehensive, but also unprecedented when compared with other transport projects such as the expensive Roads of National Significance programme.
But now, the facts are in: it’s time to build the City Rail Link.
I know Jason has some more thoughts in reply to our piece and I’ve encouraged him make those thoughts known in the comments on this post so everyone can see them and join in the discussion.
Auckland Transport’s decision to not build Newton Station as part of the CRL project, instead upgrading Mt Eden, potentially has some impacts on future train operating patterns that are worth analysing and discussing further. Our preference for operating patterns, prior to the change, is shown in the Congestion Free Network map for 2020 – the immediate post-CRL period:
There are numerous small variations you could make to which lines link with other lines – should the western join with the southern instead of the eastern? Should the Onehunga Line go via Parnell instead of Grafton? Should Mt Roskill to Panmure be the “short runner”?
However, there are some pretty basic concepts here – most importantly that this is a Metro style operating pattern with our assumption being all trains stop at all stations and that we’ve tried to keep the patterns as simple as possible. For example, all trains on the inner part of the western line go straight into the CRL tunnel with journeys to Newmarket either being provided for by staying on the red line right around the city centre, or transferring services at Newton.
After seeing the response to the CRL changes on Friday we gave AT a bit of a push to publish just what their thinking was around how they would run trains after the CRL was built. To their credit they published it that afternoon.
At first glance the plan looks fairly simply however as I’ve looked at it more it’s raised a number of questions for me. These include
- Do we really need a west-south service?
- Can the Onehunga line cope with that number of trains?
- Do we really need so much service between Newmarket and Penrose?
- Can Newmarket cope with that number of trains?
- How confusing will it be with the Red line doubling back on itself?
- Does Manukau have enough service?
- Does the Western Line past Henderson have enough service?
- Does the Eastern Line have enough service?
Do we really need a west-south service?
So of course, not having Newton any longer – and having Mt Eden station removed from the “Grafton to K Road” direct rail connection, means that west to Newmarket trips which AT say currently make up about one third of western line trips would need to be provided for in one of four ways.
- Staying on the train right through the CRL and Parnell to Newmarket
- Changing trains at Karangahape Road from an inbound western line train to an outbound train travelling from the city to Grafton and Newmarket
- Providing a direct rail service from the west to Newmarket
- Running a shuttle between Mt Eden and Newmarket
Auckland Transport has seemingly chosen option 3 of the above, with their preferred train operating pattern showing a direct service between the west and Newmarket – then onto Otahuhu. This is the purple line on the map. At first glance the purple service seems potentially quite useful – providing that one seat ride from the west to Grafton and Newmarket, as well as recognising “not everyone wants to go to the city centre”. The question is though, “will the level of demand for the purple line be high enough to justify reasonable frequencies?”. And if not, for example if it is only run at three trains per hour, then it’s not good enough to expect people to just turn up and go and therefore won’t it be faster to just transfer at K Road?
It’s also worth remembering that just because 1/3rd of trips on the line are currently to Grafton/Newmarket, it’s not a massive number overall and won’t grow as much as trips to the city centre. I’d also point out that it doesn’t serve all West-Newmarket trips, my wife for example is now travelling to Grafton but as we catch the train from Sturges Rd it would still mean a transfer for her.
Other considerations include:
- How many additional trains are necessary to operate the purple line and is there value for money from purchasing those trains solely for this line?
- Are additional turnaround facilities required at Henderson and Otahuhu for these services, and how much will they cost?
- How much will it actually cost to operate the purple line and how might that compare to say changing the New North Road buses so they directly serve Newmarket?
I don’t know the answer to these questions but they are ones that AT really need to answer.
I think my preference is to serve the west to Newmarket trips through a combination of transfers at K Road (which isn’t that much further out of the way than Newton would have been) and perhaps a Mt Eden to Newmarket shuttle. It still means a transfer but without the time penalty of going all the way to K Rd first.
The next three questions are all interconnected.
Can the Onehunga line cope with that number of trains?
Do we really need so much service between Newmarket and Penrose?
Can Newmarket cope with that number of trains?
It’s not clear from the announcement whether the Onehunga line is being duplicated. Based on discussions I’ve had I’m going to assume that because it’s not core to the CRL so it probably isn’t being done. We currently only run two trains per hour on the line however I understand that with a little work it’s likely we could run three trains per hour on it. Unless AT are planning worse frequencies than now it would mean some of the blue western line trains would have to terminate somewhere and the most likely place for that is at Newmarket. With both the red and purple lines travelling through the station would there really be enough capacity for that to happen. This is exasperated by the fact that a terminating train would have a period of layover longer than what Western Line trains currently do for the driver end change. It seems that if you do terminate trains at Newmarket you get capacity problems at the station but if you send them on down the line to terminate elsewhere the line south of Newmarket may have their own capacity constraints and you end up with the situation of it seeming like stations between Penrose and Newmarket would be serviced by many more trains than the stations on the CRL. With the exception of Ellerslie most of those stations don’t do that well for patronage despite the level of service they have.
How confusing will it be with the Red line doubling back on itself?
I realise we already kind of have this issue so perhaps it’s nothing to worry about but it just seems to me that having a line double back on it’s like this one does risks creating confusion, especially for those trying the system for the first time. Going by the current way we label services – which lists the final destination – it means a person at a station between Westfield and Puhinui wanting to go to the city would actually have to catch a train destined for Manukau or Papakura which seems a bit counter-intuitive.
On a slightly related note AT talking of closing Westfield and Te Mahia. I assume they’re on the map because the final decision hasn’t been made rather than because they’re necessarily staying.
Again another similar set of questions.
Does Manukau have enough service?
Does the Western Line past Henderson have enough service?
Does the Eastern Line have enough service?
While some lines have double ups that significantly boost capacity it seems that Manukau, the Eastern Line and the Outer Western Line miss out. Does this plan deliver enough capacity for those stations? Because we are now sticking with the same number of trains we will have by the end of next year/early 2016 that suggests they might not get more than the six trains per hour they will have post electrification. Bringing it back to the west-south service what if we provided those trips by one of the other methods suggested. Could we use them to boost frequencies on the lines mentioned that at this stage don’t seem to get any frequency benefit from the CRL. This situation would change when we order an additional batch of new trains – now scheduled for around 2025.
All up the plan does answer a number of questions but also creates a lot of questions.
Auckland Transport have announced they are cutting the Newton Station from the City Rail link in favour of an upgraded station at Mt Eden.
A significant design change to the City Rail Link (CRL), will save over $150 million, improve the reliability and journey time of train services, minimise construction disruption in Symonds Street and reduce property purchase requirements.
Auckland Transport (AT) has decided to redevelop the existing Mt Eden Station and connect it to the CRL rather than build a new underground station at Newton.
AT chairman Lester Levy says that since the City Rail Link’s concept design was developed two years ago, there has been concerted effort to optimise the design and drive value for money.
“The change that has resulted from this focus will reduce cost by removing the very deep Newton station, which will also reduce construction disruption in upper Symonds St by 12 to 18 months.
“The improved design will connect passengers at Mt Eden Station to the CRL which previously bypassed them and improve operation reliability through the provision of a separated east-west junction so train lines won’t need to cross over each other.”
Dr Levy says the changes also will result in an improved customer experience with the CRL platform at Mt Eden now to be built in a trench similar to the New Lynn station, and be open to the sky, rather than deep underground as was the case for the proposed Newton station location. This open air location and the separated train junction will also lower operating costs.
“This is all good news, at a time when patronage is increasing and people are really seeing rail as a travel choice*. We are definitely moving in the right direction to meet government targets for CRL funding,” he says.
In addition, fewer surface properties will be required. Owners affected by the new design have been contacted directly by Auckland Transport about the change.
As well as these significant community, cost and service benefits, the development potential associated with Mt Eden Station will not be limited by volcanic cone view shafts and heritage buildings which constrained the Newton location.
Changes in the rail track alignment will also reduce vibration and noise effects on surrounding properties and improve travel times.
Dr Levy says AT’s on-going design improvement focus included a comprehensive review of all project elements by an international “challenge team” of experts.
He says information on the design changes and upcoming milestones for the CRL will be explained to the community at open days in the project area in late August/early September.
*The year to June 30 saw a 13.9% increase in rail patronage in Auckland, to 11.4 million trips.
Here’s a plan of how the Mt Eden station will work. You can see the tracks for the CRL come in underneath the ones for accessing Newmarket which lead to the station in the trench. You can also see a new road will be built that will connect the station to Mt Eden Rd. Sometimes it seems like we can’t get a PT project without having to add a new road somewhere to appease the transport gods.
And here’s an artistic impression of it.
From this information I can see two major differences between the old Newton plan and the new Mt Eden design:
Firstly, while Newton station would have been located deep under the main street of the Newton town centre area, Mt Eden station is located about 500m further south by the existing rail line. This shifts the focus of the station, and subsequent redevelopment, to the Eden Terrace area instead of Newton. This no doubt means revisiting various area plans and growth strategies, and probably requires changes to pedestrian and cycle networks and bus connections.
Secondly, Mt Eden will be located on the west side of the the new junction, which means trains running from the south to the city via Grafton and Newmarket physically can’t stop there. This is unlike Newton which would have been on the north side of the junction and a stop for all trains using the CRL. So relative to Newton, Mt Eden loses connectivity to the south and gets less frequency to the remaining city stations.
Effectively this ‘downgrades’ Mt Eden to being the first suburban station on the Western line, while Newton would have been a proper City Rail Link stations with the same service and connectivity as Britomart, Aotea and Karangahape. The design does however include a second set of platforms at Mt Eden to allow trains to run between the west and south without going to the CRL. It looks like AT plan to make up for the loss of service and connectivity by running extra crosstown trains over the top of the regular lines, more on this below.
I have quite mixed feelings about this as there appear to be some good and bad aspects to the decision.
First and foremost it’s good that AT have managed to find ways to save money on the project – although it’s not to a level that the government are suddenly going to agree to funding it starting in 2016 like the council plan. The savings which total about $166 million are made up of $152 million in reduced construction costs and $14 million in property purchases. On the latter it means AT will no longer need to buy sites around the station entrance and that the tracks can be moved slightly closer together saving on sub-surface purchases. When I spoke to them they were initially a bit hesitant to say exactly how much the project will cost but they eventually said the non-inflation adjusted price was $2.069 billion which equates to an inflated price of ~$2.7 billion (compared to the $2.86 often quoted in the media). AT are also not to buy extra trains quite as early as planned saving an extra $330 million from the upfront budget.
The change allows for a grade separated junction at Mt Eden which can help in reducing delays from trains. The one downside to this is that there will still be five other flat junctions across the network which could cause issues for trains so it doesn’t mean there still won’t be issues.
There are other benefits the engineers have managed to get out of the design including:
- Previously all of the proposed stations were planned to be on a slight grade but now they will be able to be level.
- They’ve improved the track alignment allowing for slightly faster trips (up to 30 seconds faster per trip from the west)
- They’ve managed to squeeze slightly more width out of the Aotea station island platform. It will now have a slight curve on it and at it’s widest will be about 9.5m wide.
In my view shifting the station back to Mt Eden significantly weakens the potential catchment and development potential of the station. It means that most of the land immediately south and within 800m of the station will be the existing standalone houses that are not able to be developed due to the zoning and heritage rules. It also means that the potential developments north of the original proposed station are not as likely to happen as they won’t be in as close proximity to the station. In saying this it also made me think that if we could improve access across the CMJ then it is possible some of that potential growth might be able to be served by the K Rd station which is likely to have a station entrance on Mercury Lane.
For their part AT say they think the change in station will allow for development to happen quicker on the large site that will be left after the CRL is completed. What’s more the land in the area bounded by the railway line, New North Rd and Mt Eden Rd doesn’t have the volcanic view shaft requirements on it allowing for taller buildings than in other areas around Newton. All up they say the construction will leave about 2.7ha of developable land almost right next to the station. Further as the council will own that, it’s the one who will get significant improvements in property values from the presence of the station. That fits in nicely with Michael Barnett’s correct suggestion of developing council land near stations to help pay for the councils share of the project.
Perhaps the biggest concern I have with this suggestion is that it may lock us in to having to always run West to Newmarket/South trains for perpetuity. With a Newton station it would have allowed us to run a simple network at high frequency with those going to Grafton, Newmarket or other points south doing a quick transfer across a platform. Because there is no platform on the eastern side of the Mt Eden Junction it means people transferring either have to go in to Karangahape Rd – adding at least 5 minutes to their journey – or we run direct west-south services. The problem with the latter there’s not likely to be enough demand to run them at anything other than every 20 minutes which is not turn up and go frequencies. It thumbs it’s nose at the New PT network being implemented by AT which focuses on concentrating service on core routes and encouraging transfers expand the reach of the system.
Here is what Newton may have looked like, because of it’s depth it was planned to be accessed by a series of high capacity lifts.
So what do you think of the change?
Update: here’s a video showing the change
When the government finally announced they would support the CRL – but starting in 2020 – they listed two targets that would need to be on track to being met to bring construction forward.
- Rail Patronage to double to 20 million
- CBD employment to increase by 25%
We’ve written about both of these a number of times before. I personally think it’s quite possible that we will reach the 20 million patronage target early, especially if we can continue the current growth of over 12% per annum. The harder target – and dodgier one – is to increase CBD employment by 25%. It’s more dodgy as it appears to be being used as an indicator of travel demand but there are many other factors that might increase demand for rail e.g. increases in parking prices and the number of students.
An article in the Herald on Tuesday highlights just how hard the employment growth number will be.
Auckland businesses are squeezed for office space, and the central city is experiencing its most critical shortages of commercial real estate on record.
So rents could be about to shoot up fast.
Chris Dibble, Colliers International’s national research manager, said latest analysis of vacancy rates surprised him because it showed that an area less than the size of a soccer field was available to lease.
“We knew it was going to be low, but not this low. The prime sector for premium and A-grade vacancy rates in Auckland CBD is just 1.4 per cent, beating our expectations of 2 per cent. It was 4.7 per cent six months ago and the 20-year average is 8.2 per cent,” he found.
“The vacant space aggregates to just 6116sq m, less than a soccer field and unprecedented in our records which began 20 years ago,” Dibble said.
“Auckland CBD property houses some of the most productive businesses in New Zealand and with little space available for expansion, we are stalling the potential growth of the country at a critical time in the cycle.
“In a market that needs to attract quality staff through quality environments, the lack of available space and developments nearing completion means we will stumble just as we were making headwinds in what has been a tough slog for many. There are only 11 prime buildings with vacant space available. Only eight buildings can accommodate more than 20 staff (currently 11 per cent of the overall CBD market).
“Only seven are able to accommodate less than 20 staff. Tenants who haven’t found suitable accommodation will have to forgo quality or wait until early 2016 for a slight reprieve from spec builds such as Mansons TCLM’s development or Goodman Group.
In effect CBD job growth – which has been strong in the last few years – is going to dry up simply because there’s not much office space left and there’s not a huge amount to come on stream any time soon. Office space will get a bit of a bump from the Precinct Properties redevelopment of the Downtown Mall site but that won’t come on stream till 2019. That development though will see at least the first part of the CRL constructed as it absolutely has to happen at the same time as the redevelopment seeing as it passes through the basement.
Transport networks and urban planning can have extremely long-lived effects on society, the economy, and the environment. The government’s decision to invest in an electrified commuter rail network for Wellington in the 1930s led to an early form of transit-oriented development in the region. Wellington’s post-war urban growth has been concentrated in areas served by rail lines – providing the region with long-lasting benefits.
In Auckland, of course, things were very different. After the role that rail played in Auckland’s early development, successive governments decided to:
And, of course, these years of refusal were coupled with a decision in the 1950s to invest heavily in a motorway network for the region. The Master Transportation Plan of the era contains some truly awe-inspiring concept designs, including an elevated Quay St motorway that would have doomed any chance of Auckland’s recent waterfront revival:
Leaving aside a few extremely white elephants, many elements of the plan are quite familiar to modern Aucklanders. The Southern and Northwestern Motorways and the Harbour Bridge were built, kicking off development booms in Manukau, the North Shore, and West Auckland. In a 2010 Policy Quarterly article, Andrew Coleman assessed the effects of motorway development in Auckland and the US, concluding that:
…transport infrastructure choices can have long-term and potentially irreversible effects on city form. A city that chooses to invest in roads rather than public transport infrastructure to improve its transport system is likely to reduce the efficiency of any subsequent public transport investments, by causing population and employment in the city to disperse widely over space. When making decisions to build roads, therefore, the city planners need to take into account the way roads affect the operation of subsequent transport infrastructure investment choices.
So it’s worth asking: Are we valuing future outcomes in the right way? In economese, this means asking about our “rate of time preference”, or the degree to which we value present-day outcomes over future outcomes.
A 2011 NZIER paper by Chris Parker provides a fairly accessible introduction to this topic. (Transportblog reviewed the paper when it originally came out.) Parker highlights how much of an effect different discount rates can have on our decisions about the future. As Figure 1 below shows, an 8% discount rate – recommended by the NZ Treasury – means that we place no weight on outcomes that occur 40 years in the future. (To put that in perspective, the average New Zealander lives twice as long as that. I certainly expect to be alive in 40 years!) A 3% discount rate, by comparison, means that we place a much higher value on outcomes that far in the future.
Last July, NZTA decided to lower its discount rate from 8% to 6%. This change means that transport evaluations now place a slightly greater weight on future outcomes than before. However, as NZTA’s documentation showed, we still discount the future to a much greater extent than countries like Germany (3% discount rate) and the UK (1% to 3.5%).
NZTA’s new discount rate might still be too high to properly account for the long-lived effect of infrastructure development on urban form. As we’ve seen, Auckland and Wellington are still benefitting from, or coping with, with the effects of investment decisions made 60 to 80 years in the past. Under current evaluation procedures, we wouldn’t have considered such long-lasting effects.
A new research paper by economists at the University of Chicago and New York University suggests that people place significant value on outcomes that occur dozens or even hundreds of years hence. The authors measure long-term discount rates using an innovative method that relies upon observing differences between the prices for freehold and leasehold houses in the UK and Singapore:
In Giglio, Maggiori and Stroebel (2014), we provide direct estimates of households’ discount rates for payments very far in the future, by studying the valuation of very long (but finite) assets. We exploit a unique feature of residential housing markets in the UK and Singapore, where property ownership takes the form of either very long-term leaseholds or freeholds. Leaseholds are temporary, pre-paid, and tradable ownership contracts with maturities ranging from 99 to 999 years, while freeholds are perpetual ownership contracts. The price discount for very long-term leaseholds relative to prices for otherwise similar properties that are traded as freeholds is informative about the implied discount rates of agents trading these housing assets. This allows us to gather information on discount rates much beyond the usual horizon of 20-30 years spanned by bond markets.
This analysis suggests that long-run discount rates are significantly lower than those we use for project evaluation – in the range of 2.6%. In other words, people making significant financial decisions today place some value on outcomes for future generations that they will never meet:
We use these estimated price discounts to back out the implied discount rate that households use to value cash flows to housing that arise more than 100 years from now. We find the discount rate for very long-run housing cash flows to be about 2.6% per year. Interestingly, we find similar implied discount rates in both the UK and in Singapore – two countries with very different institutional settings.
The authors suggest that their findings have implications for intergenerational fiscal policy and climate change policy. They’re also likely to have implications for the way we evaluate transport projects. Today’s planners should take care to preserve and improve transport options for future generations, rather than “locking in” a particular urban form.
Finally, with that in mind, it’s worth recalling the findings of the 2012 City Centre Future Access Study, which compared options for improving transport capacity to Auckland’s growing city centre. In Section 7 of the Technical Report, the authors found that when a longer evaluation period (60 years vs. 30 years) and a lower discount rate (5.7% vs. 8%) were used, the benefit-to-cost ratio of the City Rail Link almost doubled. In other words, the CRL looks even more valuable for Auckland if we take a longer-term view.
If our great-grandparents had decided to invest in Auckland’s rail system in the 1930s, we’d still be thanking them for it. Because they didn’t, though, we’re just getting around to electrifying Auckland’s rail network and still debating whether to build the CRL to unlock greater frequencies across the entire network. It is essential that we take a longer-term view on transport investments than we have previously done.
So, what’s your discount rate?
Auckland Transport have said that they are focusing efforts to design the northern end of the CRL from Wyndham St to Britomart.
Design of the Britomart end of the City Rail Link is being progressed with Auckland Transport asking the construction industry to register its interest in the work.
The focus of the design work will be on the downtown section of the City Rail Link, from Britomart through Queen, Customs and Albert Streets to Wyndham Street.
It is the area that most affects other planned and proposed inner city development by Auckland Council and private developers.
“It’s a sensible next step to get design certainty for the part of the CRL that will most affect everyone else’s plans in the city. It is also important to have the design advanced so any consents can be identified and applied for,” says AT Chief Executive David Warburton.
Auckland Council Chief Executive Stephen Town says “this next step is important as it will ensure the sequencing of city centre improvements is well planned over the next 3 years.
Auckland Transport wants to be in a position to progress work in the downtown area so other city development can proceed without unnecessary delay, once CRL construction funding is approved.
Dr Warburton says engaging early with the construction industry in this way is routine on major projects to ensure a cost effective design that minimises adverse effects.
It’s basically the section shown below (although without needing to take all of the Downtown Mall site like originally thought)
Precinct Properties want to develop the Downtown Mall site and they have already agreed to build the tunnel under the site at the same time, this saved AT from having to purchase the whole site. It makes complete sense to then also join in that part of the tunnel to Britomart and to get it at least under the Customs St/Albert St intersection. The reason for that is there are a lot of plans in the area that will hinge on the CRL being completed so that they don’t have to be redone in the future. This includes:
- The upgrade to Quay St to be a more pedestrian friendly area.
- Changes to Customs St to accommodate the new bus network and some of the traffic from Quay St.
- Potential changes to Lower Queen St and QE2 square
AT have also said they are likely to have some new images available in a month or so relating to station designs which will be exciting to see.
As the Council undertakes the challenging task of putting together its budget for the next 10 years there is renewed focus on the City Rail Link project and the extent to which Council can afford to fund its share of the project over the upcoming years. With stage one of the project pushing ahead in the relatively near future and lots of questions remaining around the timing of government’s contribution to the project as a whole, the timing and phasing of the CRL will clearly – and rightfully given its cost and its fundamental importance to transforming Auckland – be a key point of discussion over the next few months.
A good conversation about CRL needs to be well informed though – and in this regard it seems that both the Council and Auckland Transport have dropped the ball on the project again and again over the past few years, to the extent that it remains fundamentally misunderstood over and over again, including by local politicians in areas that would benefit from the project tremendously.
A couple of days ago I wrote about how the CRL helps address capacity issues, particularly in the CBD however it’s not only the CBD that benefits from the project. Last year I put together a post outlining how the CRL benefits various parts of Auckland as well as the region as a whole. It’s worth revisiting those key points:
Benefits for all of Auckland (and New Zealand):
We generally don’t invest in transport just for a transport outcome, but because we want an improved transport situation to lead to other, wider, benefits – in particular economic growth and productivity. The CRL will enable the Auckland City Centre to grow much larger than would be feasibly possible without it – the City Centre Future Access Study highlighted the massive transport issues that we’ll face in the not too distant future unless we build the link.
Enabling a larger and more vibrant city centre (amenity of the place isn’t going to be great with thousands upon thousands of buses trawling through it) is shown internationally to significantly boost economic productivity – as city centre workers are generally more productive than those elsewhere. This chart is from the 2010 business case:
There are two distinct elements which make up this difference:
- Some particularly productive jobs tend to exclusively or near exclusively locate in the CBD
- The same job done in the CBD is generally able to be performed more productively than elsewhere
Ultimately a more productive and successful economy should benefit everyone, through an increased standard of living, an increased tax take that can be spend on social services etc. Compared to cities like Sydney, Melbourne and Brisbane, Auckland has a relatively small city centre as a proportion of total employment – which the economic research above tends to indicate could well be a reason behind Auckland’s relatively poor economic performance.
The other main ‘region wide’ benefit is how having a vastly improved rail system will take pressure off Auckland’s already stressed roading network as the population grows. The price of planned motorway upgrades (e.g. $5 billion Harbour Crossing) highlights that expanding the motorway network to match population growth is just impossible – whereas the rail system has huge unused capacity that the CRL will enable. It also tends to be the car trips which can easily be replaced by rail (longer peak time trips to the city centre) which create the most significant congestion for everyone else – so getting those people off the road could well help your commute, no matter where you live and where you’re heading to.
Benefits for the North:
Although the rail system in Auckland does not (yet) extend to the North Shore there are ways in which the CRL still benefits those on the North Shore. Let’s just run through a few:
- The CRL means that fewer buses need to be run into the city centre from the south, west and east – which frees up space in the city centre for buses from the North Shore.
- A future North Shore railway line would link up to the existing rail network at Aotea Station, therefore the CRL is essential to enable that future line to connect up to the rest of the rail network. A North Shore connection at the existing Britomart Station would place too much pressure on the Quay Park junction and basically negate the ability to ever build CRL.
- A large number of buses from the North Shore in the future will travel along Wellesley Street, meaning that Aotea Station will be really handy if passengers from the North Shore wish to transfer onto a train to travel elsewhere in Auckland.
Benefits for the West:
For people outside the realistic catchment of the Western Railway Line, the benefits are quite similar to people living on the North Shore. The northwest’s future busway along State Highway 16 will inevitably feed a lot of buses into a city from a corridor that’s not likely to be replaced with rail – and those buses will need to go somewhere and will operate much better if they’re not competing with buses from rail served areas for streetspace.
For those within the Western Line catchment, you are some of the biggest beneficiaries of the CRL as you trips will be significantly quicker if you’re travelling to the CBD, but also you’ll be able to enjoy significantly more trains as a result of CRL unlocking the capacity of the whole rail system – creating a huge benefit even if you’re not travelling into the city centre. Here’s a useful before and after in terms of travel time from key stations to the city centre – note the vastly quicker times from the West:Benefits for the Isthmus Area:
As detailed earlier, areas in the isthmus along the Western Line will benefit hugely from the CRL in terms of travel time and also increased frequency. The city centre will benefit enormously from improved access – meaning that most places will be within a short walk of the rail network – rather than just a few areas around Britomart.In other parts of the isthmus, areas near the inner southern line and the eastern line will benefit from faster trips to a greater proportion of the city centre and also increased train frequencies (meaning shorter waits at stations). Areas outside the existing rail network will enjoy similar benefits to the North Shore in terms of their buses not getting stuck in as much bus congestion in the city centre. But also the CRL enables other extensions to the rail system, such as the Mt Roskill branch line – which would be pretty cheap to build and extends the rail network into a part of Auckland with heaps of development potential, along with taking some pressure off Dominion and Sandringham Road buses.
Benefits for the South:
The new bus network in the south revolves around better bus routes for cross-town journeys and feeding a lot more buses into the rail network at key locations like Panmure and Manukau. The City Rail Link will enable higher frequencies along the rail network, meaning less overcrowding on services and shorter waits for trains. It also means faster trips from the south to parts of the city centre beyond the immediate surrounds of Britomart.
The CRL is also a prerequisite for rail to the airport, as without CRL it’s not possible to run trains on the Airport Line at a frequency of greater than half-hourly (and you wouldn’t spend $700m or more on a line that can only run half-hourly). The Airport Line potentially has massive benefits for the south – improving access to the airport itself for employees, acting as a catalyst for the redevelopment of areas around new stations at Mangere Bridge, Mangere Town Centre (and perhaps elsewhere?) and providing a rapid transit quality link between Manukau and the Airport. But none of that can happen until CRL happens.
Benefits for the Southeast:
As part of the AMETI project, a busway will be built between Botany and Panmure. This will provide a really high quality public transport option for a part of Auckland that has historically been incredibly neglected when it comes to public transport. However for trips between Panmure and the city centre, the rail network will still be the rapid transit option and the CRL provides both the additional capacity of extra trains along what will become a very busy section of the rail network, as well as direct trains from Panmure to not only Britomart but also onto Aotea, K Road and Newton stations – providing far better access from the southeast to the wider city centre and its surrounds.
As you can see the CRL benefits all different parts of Auckland – whether they’re on the rail network or not. I think the two areas that will benefit the most are the city centre itself and the west: due to the improvements in coverage of the rail network and the “cutting the corner” between Mt Eden and the city centre respectively. However parts of Auckland which aren’t even on the rail network will benefit: either through the CRL making possible future expansion of the network (i.e. Airport Rail, North Shore rail and the Mt Roskill Branch) or CRL removing many buses from the network and therefore allowing the bus system to operate more effectively – such as for the North Shore and the Northwest.
In addition to these specific benefits the economic growth and the significant capacity expansion of Auckland’s transport network that the CRL will provide have the potential to benefit the whole city, and in fact the entire country.
Some additional key additional points
- In relation to the south is that without CRL we will never be able to increase train frequencies beyond what they are once electrification has been completed. Papakura has roughly a peak time train every 10 minutes at the moment – without CRL that’s not going to change – ever. How does that work with a city the size of Hamilton planned between Papakura and Pukekohe over the next 30 years, plus huge growth within the existing urban area over that time too.
- It increases connectivity and reduces travel times via PT for trips that involve the rail network thanks to the higher frequencies and in some cases the more direct services e.g. from the North Shore to the Inner West.
I can’t think of any other project that manages to have such a significant impact across the entire region. It is one of those projects that is so transformational most people simply won’t realise the full extent it will have on how we get around.
I’ve been noticing in recent times an increasing number of people questioning the need for the City Rail Link. I’m not sure what’s causing it but it might be that Auckland Transport have been remarkably quiet on the project for the last six months or so. With this post I thought I would highlight some of the key reasons why the project is needed and it’s all related to capacity.
It’s commonly mentioned by those that oppose the CRL that the CBD is only 15% of all regional employment. What’s not mentioned is that 15% represents ~100,000 jobs. While the 15% figure is true it ignores a couple of key points.
- City Centre employment has grew by about over 20,000 jobs between 2000 and 2013
- The numbers are based on a fairly narrow definition of the CBD. Expanding that to include the city fringe areas which are also likely to be directly affected by the CRL means the total number of jobs in the central city is 24% (~153,000).
- At ~100,000 jobs the level of employment in the CBD is still significantly larger than any other single area in the region. The second largest number of jobs is the massive commercial area covering Onehunga, Penrose, Ellerslie and Mt Wellington which combined has 60,000 jobs. Areas like the airport (including around Ascot/Montgomerie Rd), Manukau/Wiri, East Tamaki, Albany and Wairau/Smales Farm each only contain between 20,0o0 and 30,000 jobs.
- In addition to the CBD, employment areas all along the rail network would benefit from the greater frequencies the CRL would deliver.
- Employment isn’t the only thing that happens in the CBD, there are also 40,000-50,000 students at the two universities plus more at other education institutions.
Both employment and tertiary student numbers are expected to grow significantly in the future. AT say that by 2041 employment in the city and fringe areas is expected to increase to over 200,000 and student numbers to around 72,000.
That’s a lot of growth but why do we need it in the CBD, why not encourage it to other parts of the region?
Despite decades of anti CBD policies one of the key reasons the CBD is the size it is, is simply because of its location – it’s central. A large part of that is simply its historical location and how the city has subsequently developed but it means it’s an area that has relatively equal access from the North, South, East and West. That means employers in the CBD have a much larger pool of potential talent to choose from than ones in say Albany or Manukau.
Auckland is home to 60% of the top 200 companies in the country and a many of them based in the CBD due to the reasons just mentioned as well as to gain the benefits of agglomeration. It is why even companies like Fonterra who make their money from the rural sector have their head office functions in the Auckland CBD. The types of roles found in the CBD also means those workers tend to earn on average 27% more than workers in other parts of the region. So yes we could encourage or even require those new jobs to be elsewhere in the region but it’s because of the factors mentioned that growing the CBD is something that can help improve our economy further in the long term.
However if we are to enable that growth to happen we need the capacity so that people are able to get to the city centre and that’s where the problems begin. The roading network is already at capacity at peak times and the costs to increase that capacity from now onwards by any substantial margin are likely to be astronomical. Over the long term there is also likely to be less road space in the CBD to handle traffic thanks to the focus on making the city a more pedestrian friendly area. In short we will have to find a different way of getting more people the city centre and that’s where PT comes in.
Thankfully we’ve already been seeing significant change when it comes to PT use and the city centre. Since 2001 the number of people entering the CBD by car in the morning peak has actually decreased while the number entering via PT has increased substantially and resulted in an increase overall in people arriving in the CBD.
Over the coming years we will see further enhancements that will deliver greater capacity and frequency to the CBD (and other places). This comes from a combination the New Network and electric trains both of which should help to revolutionise travel in Auckland.
But why not just use buses?
The New Network greatly simplifies the regions bus routes and provides more capacity in many locations. However over time an increasing issue is going to be bus congestion and it’s predicted that on Symonds St alone there would need to be over 250 buses per hour in the peaks. In short we would end up with a wall of buses situation and that’s not what anyone wants to see. The map below shows where the most congested parts of the central city are expected to be by ~2041 if we don’t build the CRL .
The City Centre Future Access Study looked at a huge range of bus solutions to solve the capacity problems but found none were as good as the CRL – although it did say some improvements were needed to surface buses.
While the road networks are at capacity the one network we have that has plenty of capacity just waiting to be unlocked is the rail network. The problem is that despite an estimated 40% increase in train capacity from the new electric trains it simply won’t be enough long term. It’s expected that the strong patronage growth we’re seeing will continue and will be aided further by the new network which sees more buses interchanging with the rail network. While the services we have might be run to capacity the rail network itself is far from capacity and is being held back its own constraints. The tunnel leading into Britomart acts like a funnel limiting how many services we can run. It has long been said the maximum number of services we could run is 20 per hour made up of 6 per hour per direction from the west, south and east and two per hour to Onehunga. We’re already very close to that mark and have been for some time. Other options for expanding Britomart or the approach tunnel have been investigated but are also quite costly and don’t give the advantages of delivering people further into the city centre.
So a large part of the CRL project is not so much about making the rail network better but simply about providing the capacity to allow the CBD to grow. The other options for increasing capacity are more costly or aren’t able to deliver enough extra people to the CBD to allow the growth to happen..
Former ARC Councillor Joel Cayford has recently criticised the City Rail Link as being unaffordable in the near future – largely it seems because of the need to invest in a number of pieces of bus infrastructure to support the new PT network that’s being rolled out over the next few years. Here’s his key point:
However, the CRL is a massive project that improves just one of Auckland’s transport networks – the rail network. It will have a huge impact on Auckland CBD during construction because of the cut and cover sections through Queen Elizabeth Square and up Lower Albert Street. It will offer major opportunities for land development – including the Downtown Precinct which abuts Queen Elizabeth Square. And it comes at enormous cost.
So it needs to be right. It is more important that it’s planned right, than that construction gets started in 2016. And it is critically important that its construction takes its place in the queue with other important public transport network improvements.
This Auckland Transport map depicts the proposed Frequent Network which would/could have services running at least every 15 minutes 7am to 7pm 7 days a week. What it amounts to is a strategic re-organisation of Auckland bus routes in particular. It has largely been agreed after detailed consultation. Parts of the South Auckland network have already been improved.
The transport objective underpinning this plan is the establishment of frequent services right across Auckland. Not just on Rail and the Northern Busway (which you can see in black) NB: The proposed CRL is not shown on this map, but its route is more or less from Britomart, via K’Road to Mt Eden station (shown as the purple star).
Given the affordability of the CRL, the low hanging fruit public transport priority needs to be to deliver the frequency and promise that can be obtained from the new frequent bus sections of the network, which require modest investments in key sections (bus priority lanes, other priority measures such as priority signalling, some network interchange stations, extended lanes, corridor widening, and additional bus stops and shelters).
I understand that all of these bus network corridor improvements have been planned and await funding in a package of works that will cost about $200 million, but that this package is being stalled because of the perceived priority of the CRL. Under the mayor’s current direction, the CRL project is becoming a black hole. All consuming. Surely it’s a priority for South Aucklanders to benefit from the promised frequent bus service.
The political problem that I see is that the pressure to “start CRL in 2016″ (especially in a substantial way) threatens a tight public transport budget. And threatens to delay the rollout to wider Auckland region of frequent bus services that might not be “world class”, but they will be a lot more reliable and attractive alternatives to car than the bus services available now. And the packages of work required a whole lot more affordable for Auckland Council than trying to get the CRL off the ground all by itself.
We know from page 96-99 of Regional Public Transport Plan that various pieces of infrastructure are required in the near future to ensure that the new network can launch successfully in 2016. Items identified as essential include:
- Integrated ticketing (completed)
- Electric trains rollout (already funded)
- Integrated fares (funded in 2014/15 Annual Plan)
- City Rail Link (for the 2022 networks rather than the 2016)
- Bus stop and shelter programme ($30m programme completed by 2015/16)
- Otahuhu interchange (funded in 2014/15 Annual Plan)
- Te Atatu bus interchange (proposed for funding in 2016/17 year)
- Westgate bus interchange (proposed for funding in 2016/17 year)
- Wynyard bus interchange (proposed for funding in 2015/16 year)
- Other city centre bus infrastructure (funded over three years up to 2016/17 year)
There are others but either they’re desirable rather than essential or they’re fairly small. Joel says all up this comes to about $200 million and that might be roughly in the ballpark from what’s in the RPTP. We really do need to do these projects – and a bunch of bus lanes – to make sure the new PT network is implemented in a successful fashion. Its connected design relies upon good quality interchanges and a much larger bus lane network to ensure services run quickly and reliably. So I am in full agreement with Joel that we can’t let funding CRL (or AMETI, East-West Link, Penlink, Mill Road or any of the other big projects sitting in Auckland Transport’s future work programme) get in the way of funding these other projects.
But where I disagree with Joel is the extent to which the “new network infrastructure” outlined above really conflicts with funding CRL. Timing-wise, it seems that most of what’s listed above will be completed by 2016 or 2017. Almost by definition the projects have to be done by then in order to roll out the network successfully. No Otahuhu interchange means no new southern network, no Te Atatu bus interchange means no Western network rollout. These projects are top of the current priority list – with many funded in the 2014/15 Annual Plan (see page 198 of this document). Further there has been mention of the need for this investment in the draft Government Policy Statement.
GPS 2015 (draft) will enable:
- completion of improvements to metro-rail services, integrated ticketing and public transport network changes intended to increase patronage, including transfer and interchange facilities
- provision for targeted infrastructure improvements that improve transfer facilities across the network and address emerging bus capacity constraints in central Auckland, Wellington and Christchurch
In contrast, we know that even if construction of the City Rail Link begins in 2016, the serious investment in its construction will be after 2017 once the main tunnelling and construction of the three new stations gets underway in earnest. Early construction – particularly for the section under Britomart and the Downtown Shopping Centre, is around $250m, leaving plenty of available funding for the new network infrastructure, given that Auckland Transport plan to spend $825 million on transport projects in the 2014/15 year by way of example.
Therefore it seems that there’s little conflict between successfully implementing the new bus network and building the CRL. Put simply, they’re two different things happening in different timeframes – bus stuff in the next 2-3 years and then CRL’s serious investment after that. I wish Joel would spent more of his time criticising the bigger risks for improving public transport in Auckland – like the limited PT funding available in the Government Policy Statement, the refusal by treasury to fund the Northern Busway extension to Albany as part of the Northern Corridor package, NZTA’s willful disregard of the need for a Northwest Busway, government blowing billions on unneeded state highways, the potentially over-sized East West Link project, the expensive and unnecessary Penlink project and many more.