Agglomeration, trade, and the prospects for Christchurch

This article was originally posted on Making Christchurch, a group blog set up by Barnaby Bennett in the wake of the 2011 Canterbury Earthquake, at the invitation of Transportblog commenter Brendon Harre. While it’s focused on Christchurch, many of the ideas in the article apply everywhere.

The paradox of the New Zealand economy, to many, is that we are a highly urbanised nation that specialises in trading agricultural commodities. This isn’t a new phenomenon. According to Statistics NZ, New Zealanders have mostly lived in cities for roughly a century:

Stats NZ historical urbanisation rate chart

Economic activity has followed the balance of the population, with the result that the majority of New Zealand’s economic activity is now concentrated in its three main cities. Based on some conservative estimates, the Auckland urban area accounted for 34% of the country’s gross domestic product (GDP), Wellington accounted for 12%, and Christchurch for 10% in 2013.

This has important policy implications. New Zealand’s future economic success will increasingly depend upon what happens in its large cities, Christchurch included. A robust rural economy, while important, is not sufficient to raise our living standards. And, increasingly, the drivers of economic growth in cities are different than the drivers of growth outside cities. Urban economic growth is less about the physical quantity of things being extracted or processed, and more about productivity growth and innovation – doing more different things with fewer inputs.

Agglomeration economies in theory and practice

How does this work?

Economists have used the term “agglomeration economies” as a catch-all description for the economic forces that shape and sustain cities. It describes the productivity gains that arise as a result of urban scale and density. However, the term may conceal as much as it reveals.

Agglomeration is not a single process, but a variety of different types of processes that occur in cities, e.g.:

  • Geographical concentration allows firms to reduce supply chain costs and access more specialised inputs
  • Increased accessibility between firms and workers allows better skill matching and growth prospects
  • Proximity facilitates knowledge spillovers between people with clever ideas to share.

Economies seldom stand still, and agglomeration economies seem to enable them to move forwards faster. That’s backed up by the empirical literature. For example, Graham and Maré (2009) find that when places in New Zealand experience increasing density of employment, they subsequently become more productive. (Other research has also found evidence of bidirectional causality – i.e. productive places also tend to attract more jobs.)

How do cities trade?

A well functioning urban economy – one in which firms can trade with each other, workers can access jobs, and everybody has spaces where they meet and share ideas – will generate new goods and services and proliferate successful innovations widely.

In doing so, cities also rely upon inputs from rural areas and other cities – food, energy, consumer products, investment goods, and so on and so forth. Consequently, they must trade with the outside world. So what do New Zealand cities sell?

One answer is that they export things that are difficult to measure properly. Service exports, for example, tend to be difficult to measure as they leave through fibre optic cables or in the heads of business travellers rather than on container ships. But even acknowledging the measurement difficulties, New Zealand cities don’t seem to directly export that many services. The available data for Auckland suggests that it exports goods and services at about half of the rate of the overall New Zealand economy. Christchurch probably performs similarly.

However, overseas trade is only part of the picture. As the Productivity Commission highlighted in a recent inquiry, urban service firms can play an important role in goods exporters’ value chains. In other words, the cities pay their way in part by “exporting” services to the countryside:

PC dairy industry supply chain diagram

In a related report, entitled “Trade over distance for New Zealand firms: measurement and implications“, Productivity Commission researchers took a closer look at the location of domestically tradable service industries. Among other things, they found that Auckland had specialised in tradable services. Is Christchurch similar?

Here’s a quick look at the issue based on the Productivity Commission’s data. Among the service industries, there is a negative correlation between tradability and Christchurch’s share of national employment. Christchurch has a below-average share of employment in highly tradable service industries like finance and insurance and information, media, and telecommunications. On the other hand, it does have an above-average share of employment in manufacturing, a relatively tradable sector.

PC tradability and Christchurch employment share chart

How is the Christchurch economy evolving?

This is high level industry data and undoubtedly does not capture many of Christchurch’s particular areas of specialisation. But it does suggest that the city may still be working on finding a strong niche in national and international markets. There is definitely a risk that Christchurch remains a large “market town” for the Canterbury Plains.

But how is the Christchurch economy evolving? Is it moving into relatively tradable or knowledge-based industries that may foster stronger agglomeration economies?

We can use detailed industry- and location-specific employment data published by Statistics NZ to examine how local economies have evolved in recent years. While there have been some other broader shifts taking place – manufacturing job losses starting in the mid-2000s and slow growth in retail and distribution sectors – I want to focus on two industries that have experienced significant amounts of change.

The following chart compares employment growth in construction and in professional, scientific, and technical services with overall employment growth in Christchurch. Both have generally grown more rapidly than average over the last decade, and experienced further growth following the Canterbury Earthquakes.

Christchurch employment growth in selected industries chart

The construction industry plays an important part in cities: it builds (or rebuilds) urban places. Building jobs have doubled in number since the earthquakes, as people migrate in or enter the workforce. But this is a temporary phenomenon – construction employment will subside once the insurance payouts and anchor projects stop.

Professional service firms also play a role in building cities. They provide architectural and planning advice, design transport networks, and assist people in thinking about where and how to invest in the built environment. Furthermore, these firms tend to benefit strongly from agglomeration economies as they often rely upon proximity to customers, competitors, and collaborators. A well-built city is a good place for an innovative professional service firm to be.

What are Christchurch’s future prospects?

Ultimately, it is hard to tell where a city is going from a distance. Individual residents and entrepreneurs are better placed to understand which opportunities are being grasped and which are slipping away.

That being said, it is worth talking about the nature of the opportunities created by the Canterbury Earthquake. The common assumption is that the rebuild will benefit the city in two ways: first, by providing a short-term injection of economic activity; and second, by leaving the city with a set of buildings and places that it can enjoy in the future.

However, the real long-term benefits may lie elsewhere. Rebuilding a city is hard. Not many cities have the capability to manage it themselves: they must import materials and people and ideas from elsewhere to get the job done well. This creates a valuable opportunity for “learning by doing”, as local firms acquire knowledge and test it out themselves.

As the great urbanist Jane Jacobs argued, this process is integral to urban economic growth. Innovation often begins when cities import new goods and services – and then figure out how to make them locally or adapt them to the local context. As she says, “economic life develops by grace of innovating; it expands by grace of import-replacing.”

The rebuild has the potential to encourage this process in Christchurch. So we might ask: what are the builders and professional service firms learning in the process? Are they figuring out how to adapt other cities’ ideas and shape them to fit in the New Zealand context? And when the road works end and the cranes clear out, what will they do next?

Guest Post: Christchurch Suburban Bus Exchanges

This is a guest post from William Stewart in Christchurch.

In 2010, I wrote a short article about the need for Public Transport integration with shopping centres and the need to consider this integration when granting resource consent.

I love the idea of having public transport as part of the mall, not just tacked into the side of a building, or 5min walk away across several streets with heavy groceries. Here is what I consider essential to the uptake of public transport, and making PT relevant and usable for everyone that uses shopping centres.

  1. Routes – All PT routes near a shopping centre should stop at that shopping centre. The stops/stations should be as close as physically possible to each other, and different routes should use the same (where possible) stops, not different stops blocks away.
  2. Access – Stops / Stations should be conveniently located to main entrances to the mall. They should not be located outside the carpark, but rather right next to the door. There should be undercover access to the stop/station
  3. Station Quality – Stops / Stations should have enough seating for the majority of shoppers using PT. The station should be undercover, and have windbreaks and where possible should be inside the building (like the new Christchurch Exchange lounge) but unlike the Invercargill Bus waiting room (which is about 200m from most of the bus stops.Stops should have the complete time tables displayed for all routes in the area (including routes which may depart from other nearby areas). Additionally electronic signs must be visible and display the next 5 buses or so on the way (Christchurch is pretty good for this)
  4. Integration with the Mall – Public transport times should be concurrent and relevant to the hours of the shopping centre. The shopping centre should display time table information within the mall, perhaps in the food courts or at a high traffic zone which is further away from where the stop is.

Westfield Riccarton Shoppingtown is one of the largest malls in New Zealand. Unfortunately, while it sits on the busy and congested Riccarton Rd, near the heart of Christchurch and with over 10 bus routes, integration with transport is woeful. There are 4 bus stops which service Riccarton Mall. Of those the closest, the minimum distance to walk is 50 metres from the mall exit , which is unsheltered from wind or rain. The stop on the other side of the road is another 100 meters away. There is no in-store mall signage for public transport to advise people where the bus stops are, nor to advise the times of services.

Chch suburban bus stops 1

Additionally, from around this time or prior, the Christchurch City Council (CCC) has been fighting an up hill battle to try and install bus lanes on Riccarton Rd, a core arterial route through one of the biggest shopping areas in the city for many bus services, but also very congested. Until recently, they have been defeated by shop owners waging short sighted battles against losing their car parks.

I’m happy to announce that recently it was announced that this section would be redeveloped to add in bus lanes, that the bus stops would consolidated, moved closer to the mall entrance and a suburban lounge would be built.

It should be noted that while you would assume Westfield would be supportive of enhancing access to their shopping centre and eager to provide better facilities for their customers, this was not the case.

“[Christchurch City Council] then looked at the possibility of putting the interchange along Westfield shopping centre’s prime Riccarton Rd frontage but it had to drop that plan because it could not negotiate a satisfactory ground lease over the 10 parking spaces required for the project.”

“Cr Paul Lonsdale agreed the Westfield frontage was the best location for the interchange but said he had been privy to some of the negotiations with the shopping centre’s owner and it was clear to him that option was closed.

“They (Westfield) are trying to hook us into something we cannot do. The only option we have is this option. I’m disappointed it is the only option but it is the best of the options we have,” Lonsdale said.”

“This is by far the best interim option we have had. It needs to serve the bus users right now. We can’t afford to have our bus users waiting in the rain for another winter,” Clearwater said.

I think it’s important to keep in mind that we can not rely on corporate interests to choose the best deal for the benefit of the public, nor should we let those short-sighted interests continue to hold back progress, as the last 5 years have done. But enough of that sour note because this is a celebratory post as the CCC has planned, overcome and delivered and further below are the pictures of the first Christchurch suburban interchange, followed hopefully soon by our new road layout.

Chch suburban bus stops 2

I would also like to acknowledge Generation Zero for their “Get Riccarton Moving” campaign which saw them encourage the public through an email campaign and an “80′s Dance Party” event to collect public submissions on the improvements, sadly the wonderful work they do doesn’t often receive credit.

Thanks to everyone who signed and shared the petition. There’s no mention of it (or our submissions) in any of the articles the Press has published, but I went to the end-of-year Public Transport Advisory Group meeting last night and was told first hand that the petition was brought up numerous times by councillors in yesterday’s Council meeting where they made the final decision. It had a real impact apparently! – Rosalee Jenkin, Christchurch Gen Zero”

Before we show you the final results, here are the plans:

Chch suburban bus stops 3

Chch suburban bus stops 4

Chch suburban bus stops 5

Chch suburban bus stops 6

Chch suburban bus stops 7

Chch suburban bus stops 8

This success story has been 5 years (if not longer) in the making, and it’s easy to see how much this development will improve the lives of the thousands that use these bus routes. I’d also like to bring pressure on other shopping centres that have poor public transport integration and challenge these destinations to embrace changes like these.

Chch suburban bus stops 9

For just one example of many, here is the Palms shopping centre in Shirley, Christchurch. Note the distance from the mall entrances (green). Below is a photo of the closest bus stop to the mall – doesn’t make public transport a very appealing choice does it?

Chch suburban bus stops 10

Guest Post: Is Christchurch a provincial market town, or a diversified commercial city?

This is a guest post by Christchurch resident and urbanist Brendon Harre. An earlier iteration of this post originally appeared at Making Christchurch

Is Christchurch a provincial market town, or a diversified commercial city?

Sheep sale, Addington (ca 1920s)

Sheep sale, Addington, Christchurch, [ca 1920s]

Recently on the transportblog website Stu Donovan someone who I respect for his expert analysis and articles, wrote the following, as a comment about Auckland’s population growth.

…. I only wish central government policy-makers grasped that distinction. That while the rest of the country depends on good roads, Auckland city will increasingly depend on public transport and walking/cycling. That while the rest of the country depends on an efficient agricultural sector, Auckland depends on a diverse and innovative service sector….

Stu of course is allowed his opinion and I believe it comes from a good place. He loves the urban culture of Auckland and can see ways to improve it for all our benefit (a stronger Auckland strengthens NZ). The problem I have is the implication that the rest of the country doesn’t have or need an urban culture –that all they need from the government is some roads and an efficient agriculture sector.

For instance, I think Christchurch needs support to restore and grow its urban economy and this too would help New Zealand. In the 2013 census, Greater Christchurch’s population was 436,000. After a post-earthquake dip in 2011 and 2012, population growth has been strong at about 8,000 new residents per year and by the end of 2015 it is likely the metropolitan area has around 450,000 people. If growth drops down to a more typical increase of 4,000 to 6,000 per year then the city can expect to hit the ½ million mark by around 2025. This is a long way behind Auckland, which reached the ½ million mark in the 1960s, but by international standards it is significant.

Canterbury pop growth

If Christchurch was a city in the Nordic countries of Sweden, Finland, Norway and Denmark, then it would be the 6th largest city. Gothenburg in Sweden is the 5th largest city and has a population of 550,000. Tampere in Finland is the 6th largest city with a population of 317,000.

These cities are proud of who they are and would not accept being labelled provincial market towns. Gothenburg gives the world Volvo. While Nokia, which birthed the phone company of that name is a satellite town of Tampere. Mid-sized commercial cities, which is what Christchurch is, have more to offer than a nice leg of lamb or a surplus of milk powder. Of course you don’t even need to be a city to offer the world something more than raw commodities. Lego’s home town and still where Lego’s head office is located -is the small town of Billund in Denmark–population 6,000.

Denmark should be a fascinating place for New Zealand, because they have done something we in New Zealand struggle with. Before New Zealand was supplying the UK with food, Denmark had reconfigured its economy so that the UK would take all its bacon and butter. By 1900, 60% of Denmark’s exports were food items to the UK. Yet somehow in the intervening years Denmark has diversified their economy in a way that New Zealand has not. Perhaps, because Denmark embraced a diversity of new concepts, such as design, this has allowed them to progress their economy?

Made in Denmark

Further, Denmark has done it in a way that has given their people higher incomes and arguably at a lower environmental impact. I have asked various experts how Denmark has achieved this and nobody really has an answer. Most recently, I asked Michael Riddell former Reserve Bank economist and now blogger at CroakingCassandra.com. There seems to be no clear consensus on what New Zealand could be doing differently, although we both gave our opinions.

In Christchurch’s case it is slowly getting back its mojo from the devastating series of earthquakes five years ago. For instance, Canterbury has been the hub of outdoor design and manufacture since Fairydown, a Dunedin based sleeping bag firm created by the Ellis family in the 1920s was sold off to international interests in the 1980s. The next generation of the family set up Earth, Sea and Sky based in Christchurch, to be with other similar outdoor orientated companies. Earth, Sea and Sky have a philosophy of using local talent to create and make specialised garments here in our own back yard.  Macpac a garage start-up done good, is another firm in the outdoor design and manufacture cluster. A recent entry into the outdoor equipment stable is a firm –Uprising Climbing Holds -that makes rock climbing holds and exports them to the world. After the central city YMCA climbing gym was knocked out of action the company built a new gym near the trendy Tannery shopping complex in Woolston. The gym as well as being a business in its own right has the important side benefit of providing research and development information on new holds for the company.

Uprising climbing holds

Uprising Boulder Gym owner Sefton Priestley in the climbing room where customers test new climbing holds.

On another track, Tait Communications is a genuine Christchurch based export success story –it makes radios for emergency services and for the likes of London’s buses. It has had a tough year; revenues have retreated from earlier highs of over $200m to about $160m-$170m. Despite this setback they remain optimistic, recently targeting Rio Olympic security concerns and achieving big increases in sales through that marketing route.

tait-communications-new-building-construction-2014-1024x768

The $35 million Tait campus development is set on 11ha of land alongside Tait’s existing buildings and features the construction of an über energy efficient new headquarters for up to 350 of its Christchurch-based employees

These examples demonstrate the diversified strength of Christchurch’s commercial city that is independent of Canterbury’s farming hinterland.

In the normal course of events I would have shrugged off Stu’s comments. He expressed an opinion, I was able reply with an opinion, which got some favourable comments –so no harm done on transportblog, just some healthy debate.

My opinion which I wrote at the time being;

…. if NZ developed a post farming economy based around a diversified urban economy of agglomeration, affordable housing, good transport provision, attractive amenities for skilled workers and business etc, that is often discussed here on tranportblog, then Christchurch would be the biggest winner.

But I have noticed the ‘urban Auckland versus the rural rest’ opinion is quite widespread and being touted by some pretty influential individuals. I wonder if it is the spreading of these sort of cultural/political ideas that is holding us back?

The newly formed Committee for Canterbury chair Gill Cox recently had this to say.

Boiling it down, it starts with the economic truth that the fates of Christchurch city and its rural hinterland are absolutely intertwined. “Christchurch is a market town,” says Cox simply. “Christchurch would struggle even to have a reason for being if Canterbury were not there. The economic driver is not the city but the region.” This is why it ended up as the Committee for Canterbury rather than the Committee for Christchurch, he says. The divergence from the “committee for” movement’s city-based template was quite deliberate. Cox says before the earthquakes, Christchurch had become somewhat politically disconnected from this fact. It had dreams about being a world-class small city riding the high tech “knowledge-wave” — a mini-Copenhagen at the bottom of the world.

Of course, says Cox, Christchurch should still want to do its best on this score. But really, as a long-term strategy, it just pits the city against every other city….

Christchurch has to concentrate on its true natural advantages, says Cox. And when it comes to NZIER’s analysis, these are simply the two things that Canterbury can be a premium-quality food basket for the world, and that Christchurch can get a free ride in being the tourist and freight gateway for the South Island.

Again, news that is no surprise for those who are in business in Canterbury. But Cox says our politicians and the general public may not have the same tight focus on how the region’s bread is buttered….

Note how in Gill Cox’s opinion Christchurch is a market town not a city, that economic opportunities lie in rural not urban areas (with the exception of the city being a freight and tourist gateway) and that wanting to be a diversified economy like Denmark’s is ‘disconnected’ and ‘dreaming’.

I don’t think Gill Cox speaks for all businesses –I think many city-based businesses would be surprised about his bias. Gill Cox’s comment that the general public cannot focus on how the region’s ‘bread is buttered’, is in my opinion code for saying that the region’s economy should be directed by ‘experts’ such as himself and that democracy and debate is unnecessary. That there is no need for Canterbury to have a public conversation on how regional public resources should be allocated.

Gill Cox CfC Case

Gill Cox delivers Committee for Canterbury’s Case for Canterbury at November launch party.

If Gill Cox was just a chair of an obscure think tank then his opinion wouldn’t matter much, but he is one of six NZTA board members (the board can have up to eight members). The board is appointed by the Minister of Transport and is responsible for making independent decisions on allocating and investing funds from the National Land Transport Fund.

Transport as everyone knows on transportblog is one of the key determinants of how a city grows. NZTA is the key funder for new transport projects. Local authorities spend a lot of money on transport, but it is mainly on maintenance –they lack the financial resources to go it alone with new projects –the existing framework of local government taxation means local authorities have to co-operate with NZTA funding with regard to new projects. Unfortunately for the commercial city of Christchurch it has a funder who is completely dismissive of its needs. For example, with Gill Cox’s attitude what are the chances that Greater Christchurch will get commuter rail or any other rapid transport solution to solve its congestion problems, as has been proposed by Christchurch City Council?

Christchurch congestion

Congested Christchurch streets

The NZTA has a history of being biased against Canterbury in the 2002 to 2012 period, when the NZTA significantly underspent in the region compared to elsewhere, the cynic in me says that will continue, at least for city residents and businesses, if not for the whole region. Recent per capita spending doesn’t look so bad for Canterbury. But considering the infrastructure deficit from a decade of under spending, the amount of earthquake damaged roads, the dispersal of residents post-quakes and the strong population growth (second fastest growing region in NZ). Then Canterbury is due for some high NZTA spending — will Gill Cox and his other Board members agree to that and if they do, which new transport projects will get funding?

I wonder if Gill Cox has read the research about how transport can improve a city’s productivity and income. Alain Bertaud in his paper –‘Cities as Labour Markets’ -compiled the following studies.

In Korean cities, a 10% increase in the number of jobs accessible per worker corresponds to a 2.4% increase in workers’ productivity.

Additionally, for 25 French cities, a 10% increase in average commuting speed, all other things remaining constant, increases the size of the labor market by 15 to 18%.

In the US, Melo et al. show that the productivity effect of accessibility, measured by an increase in wages, is correlated to the number of jobs per worker accessible within a 60-minute commuting range. The maximum impact on wages is obtained when the number of jobs accessible within 20-minutes increases; within this travel time, a doubling in the number of jobs results in an increase in real wages of 6.5%. Beyond 20 minutes of travel time, worker productivity still increases, but its rate decays and practically disappears beyond 60 minutes.

Both papers demonstrate that workers’ mobility –their ability to reach a large number of potential jobs in as short a travel time as possible, is a key factor in increasing the productivity of large cities and the welfare of their workers. Large agglomerations of workers do not insure a high productivity in the absence of worker mobility. The time spent commuting should, therefore, be a key indicator in assessing the way large cities are managed. (p. 24, 25).

Given the way people were re housed after the Canterbury earthquakes -being population fell in central/inner city areas and increased in distant peripheral satellite towns then it is likely that congestion and commuting times have increased. Also the number of jobs accessible by workers in 20 minutes has probably declined. This means Greater Christchurch’s economic potential has been setback and it will not be remedied until Canterbury receives a compensatory improvement in transport infrastructure.

On the issue of whether it is better to be a market town or a diversified commercial city, research from around the world shows that market towns have the lowest income when it comes to the different types of cities.

City Types

Note the small share of value added that agriculture (in black) contributes even in market towns. Cities are competitive diversified economies and to function at their best they need to be supported as such.  Christchurch as a market town is the past. Christchurch as a modern, diverse, competitive commercial city is the future.

Christchurch striving to be a more accessible city

Some videos from Christchurch’s Central City Development Unit on the transport changes taking place.

And a timelapse of  the construction of their new bus interchange

 

Development update: September 2015

I didn’t manage to get a “development update” post out last month, but I’ve now finished doing a pretty major update to the RCG Development Tracker page. Among other things, there’s been a new tranche of Special Housing Areas, a bit more info on things happening around Westgate, and I’ve updated a lot of apartment projects around the city (which ones have begun construction, expected completion dates, etc). Plus there’s been the usual array of new projects being announced.

The Tracker does actually cover the whole country, but taking a “Greater Auckland” perspective, there are currently 4,605 apartments or terraces under construction, with another 1,541 completed since 2012, and 2,694 currently selling off the plans but not yet being built.

On the Special Housing Areas front, since I don’t think we’ve mentioned it before, the council will now be focusing on getting brownfields SHAs approved in the remaining 13 months of the Housing Accord. In the first two years of the Accord, there’s been a massive amount of greenfields (i.e. urban fringe/ sprawl) land granted SHA status, which we’ve been quite critical of. It’s good to see that the focus, and hopefully the resources, will now be shifted to making development easier within the existing city. That’s the goal of the Auckland Plan, after all.

Also in positive SHA news, a recent Herald article announced who the developers would be at two Special Housing Areas which had already been announced. Ockham Residential will be developing the site at Avondale Racecourse, and Avanda Ltd will be tackling a large site on the edge of the New Lynn town centre, including the Monier brickworks factory.

In both cases, it now seems that the sites are going to get more homes built than previously thought. For Avondale, Ockham are planning 52 dwellings, up from the “at least 15” mentioned when the site was initially identified as an SHA. For New Lynn, the master plan aims to create 1,800 homes, up from 600.

Building Consents

July was a good month for consents, with growth across the board. The problem with looking at “moving annual” figures, which is what I usually focus on, is that each month you’re only changing one figure out of twelve – so changes in the trend can take a while to show up. That said, it seems like Auckland is starting to build more homes of all kinds – consent numbers are up for detached houses, apartments and other housing types.

In the last year (the year to July, at least, which is the latest data available), there were 8,567 dwellings consented in Auckland.

Auckland Dwelling Consents

We’re still not building enough homes, though. With three people per household in Auckland, we’re building enough homes for 25,000 people a year – but our population is growing by at least 40,000 people a year. This is not something that can be solved overnight, and we need to keep growing supply to provide adequate housing for the city.

Christchurch, in Cashel St I Wait

We haven’t talked much about Christchurch recently, but it’s an important part of this fair nation and we should all be keeping an eye on what’s happening there. Four and a half years on from the February 2011 earthquake, the Christchurch rebuild still has many years to run. The video below, posted by Cera last month, shows progress on some sites (including some of the government’s “anchor projects”) while much of the CBD is still vacant.

This video shows the progress at various anchor project sites such as the Innovation and Retail Precincts as at the end of July. There is significant development happening on the Avon River Precinct, the Innovation Precinct, and the Retail Precinct with several more anchor projects moving along. This footage also shows the huge changes on the Margaret Mahy Family Playground site, which is well under construction now and will be opening in December.

The “Retail Precinct” is actually a major office precinct as well, and is made up of several large developments by the private landowners. That includes Antony Gough’s The Terrace, which began construction in 2013 – the first of the big projects to do so – but then stalled until July this year. It’s now back in action. In the mean time, some other big projects nearby – the BNZ Centre, aka Cashel Square, and the ANZ Centre – are also under construction.

Then there’s the Bus Interchange which opened a few months ago, the Justice Precinct which is well underway, and a range of other things which you can explore in the Development Tracker map (or Cera’s Progress Map). However, there are still many sites which don’t seem to be making progress, and developments which were announced to great fanfare but have now stalled – this includes a Cathedral Square site which was to have been known as ASB House, but ASB has now pulled out.

The city continues to evolve and grow, and it’s good news to see things moving forward in the private-led Retail Precinct and the public sector ‘anchor projects’. On the other hand, it’s tough to look at the Cathedral Square area, and the Cathedral itself which you can see right into via a missing wall, and not be able to find many visible signs of rebuilding. As for the Cathedral, church leaders and the government have agreed to appoint a consultant who will review the situation, and a final decision on its future could be made by the end of the year.

Guest Post: $1 billion Fletcher/Crown housing development —Christchurch CBD – Part 5

This is part five in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog.

You can read Part 1Part 2Part 3 and Part 4

Part 5: Is there an alternative model to re-developing a city centre?

The fundamental problem is how to increase amenity value without increasing property prices? How to return the amenity value created by the presence and enterprise of the community back to that community rather than to some passive site owner benefiting from increased land prices due to the efforts of others?

Obviously this is a big issue that has troubled theorists for a long time.

I will not suggest any general solutions but I will suggest a model different from Fletchers or even Mike Greer’s might have been more effective for re-developing Christchurch’s earthquake damaged inner core, in particular the Eastern Frame.

I think there was some logic for a government agency in buying up large blocks of land to ensure there is some consistency in what was rebuilt. Although it could be argued the fairest, fastest and simplest way for inner city Christchurch to rebuild would be to let the original owners to rebuild as they saw fit, but with a modern earthquake code buildings. This is what London in the most part did after the Great Fire of London. All the grand plans were eventually rejected by the Crown because of disinterested uncooperative locals and due to the fear of rioting. The major difference between the new and old London being the dictate to build in stone not wood. I believe the major flaw in the Christchurch CBD rebuild is the monopolistic nature of the process.

The eastern side of Christchurch CBD has always been the low cost, alternative, hippy and creative side of the city centre. Enterprises like start-up photography companies had premises in this part of town. Rod Donald the former co-leader of the Green party had his offices at 16 Bedford Row, which is now part of Fletchers Eastern Frame development. The interests of this ‘smaller’ end of town have not been considered in the rebuild model.

If the Crown had repackaged/planned the sites in some sort of logical way and released them back onto the market at cost for hundreds of local site owners/developers (original site owners getting the first right of purchase) to rebuild for their needs I think the community would have been better served.

Something similar to this proposal was done in Amsterdam when they redeveloped an old industrial wharf for housing and commercial space.

This being the Borneo Sporenberg project. This project was discussed in the Transportblog article Multiplication through Subdivision in 2013, as it is the inspiration for the Auckland development Vinegar Lane and some suggested changes to the Unitary plan.

Borneo Sporenburg_01

Another way to look at the Borneo Sporenburg development is it is a modern version of the traditional Euro-bloc.

Brendon Harre - Chch Part 5 - Euro Block

These are efficient high density residential building spaces because they create about 100 residential units per hectare – comparable to apartment buildings. But without the need for the same height and expensive infrastructure such as elevators. Further because each site is developed independently, each site has its own stairs and every floor has lighting and cross ventilation to the street and courtyard. This is important because if there is only one set of stairs for a group of sites and a long communal corridor it would break each floor in two, limiting light and ventilation.

The CCDU has a list of settled Crown purchases in Central Christchurch. This includes scores of purchases for the Eastern Frame. Prices ranged from $1829sqm for a 267–271 Madras St address down to $330sqm for 7 Liverpool St. With the typical prices being around the $1000sqm level. Unfortunately we don’t have the price that Fletchers pays the Crown or the details of the profit sharing agreement. So we cannot know if the Crown is making a profit or loss on land sales, if the Crown paid too much or too little for the land, although Brownlee assures us the Crown will not realise a loss.

With the CCDU purchase price figures we can do some back of the envelope calculations for our Euro-bloc build.

Let’s say the Euro-bloc courtyard developments are divided into sites that are between 7 and 10 metres wide and 10 metres deep, with a further 6 metres deep of internal courtyard space for car parking or other uses. With a height of 3 stories and the possibility of roof-top terraces.

For a 7 metre wide Euro-bloc site.

  • The whole site is 7 x (10 + 6) =112sqm
  • The building envelope would be 7m x 10m x 3 stories high = 210sqm.
  • Set the selling price for the sites at say $2000sqm, thus allowing for $1000sqm in development costs to construct paths, cycle-ways, parks etc. This means site cost is $224,000 for the 7m wide site. Note this is a comparable price to a suburban Christchurch section but at 112sqm it is one fifth the size i.e. five times more expensive –so consistent with the standard city land price curve.
  • Building cost for this sort of site could be expensive –maybe $3000sqm so $630,000 in building costs.
  • Total land plus build cost being $850,000.
  • For this you would get 210sqm of floor space, easily 4 bedrooms and multiple living spaces, a large rooftop terrace and parking in the courtyard. Alternatively you could break the space up to a ground floor commercial space. A small middle floor apartment and another top floor apartment with a roof top terrace. It is easy to imagine other ways of dividing the space between large to small residential versus commercial spaces.
  • The total build would be beyond a young nurse’s wage, but one floor, at a third of the cost, so $300,000 for a 60sqm (10sqm is lost to communal spaces –like stairs) being a large one bedroom apartment would not be.

Would this sort of Euro-bloc development be better than the Fletchers/Crown partnership CBD development?

I think it would for the following reasons.

  • Although land plus build costs are comparable to what Fletchers proposes, I doubt Fletchers apartments and townhouses will offer 210sqm of space, with parking and a large outside space.
  • Hundreds of site owners competitively completing their own builds with no ‘monopoly’ incentive to delay would likely build faster than 8 or 9 years. Some sites could probably have been started to be developed before now – 5 years after the first earthquake.
  • A modern version of the Euro-bloc would have street appeal that would attract people to the area. A fast developing, dynamic, low cost inner city residential/commercial area would add amenity value to the city.
  • The Euro-bloc proposal would be more responsive to the market/communities changing demand or preferences for inner city space –being able to flexibly change between small (60sqm) to large (210sqm) residential spaces and to switch from residential to commercial space.
  • The Euro-bloc proposal would allow original inner city landlords a way to be part of the rebuild, thus discouraging capital flight. It would maintain a large locally engaged productive capital base as opposed to encouraging passive ‘capital gains orientated’ absentee ownership of property.

In conclusion I think there is serious flaws in the Christchurch rebuild model because it only considered the needs of a limited number of property developers and the Crown, whilst ignoring the opportunity to create a broader community of beneficiaries.

Guest Post: $1 billion Fletcher/Crown housing development — Christchurch CBD – Part 4

This is part four in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog.

You can read Part 1Part 2 and Part 3

Part 4: An alternative explanation?

An alternative to the exploitative explanation is that the governing ‘elite’ response to the Christchurch earthquakes has exhibited a cargo cult mentality (definition of cargo cult here). Eric Crampton a Canterbury University economist who has recently moved to Wellington to work for the NZ Initiative wrote about this thinking behind the desire for higher Central Christchurch property prices in government circles.

The Blueprint produced by the Christchurch Central Development Unit purpose was the following, as reported by The NZ Herald in 2012, “The frame, in tandem with zoning provisions, reduces the extent of the central city commercial area so that the oversupply of land is addressed,” says the Blueprint. “It will help to increase the value of properties generally across the central city in a way that regulations to contain the central core, or new zoning decisions, could not.” The document goes on to say a further purpose of the frame is to create a buffer zone for the core to expand in the future — “if there is demand for housing or commercial development”.

Eric described this thinking as;

Because successful cities have high downtown property prices, they thought they could make Christchurch successful by forcing prices to be high. Well, that doesn’t work: high prices in successful cities reflect that people get a lot of value from being located in great downtowns, not the other way around.

Eric Crampton’s analysis (articles here and here) indicate the Fletcher/Crown high property price business model is a risky strategy for redeveloping Christchurch. It is a big ‘all your eggs in the one basket’ project. The risk being that the fundamental amenity value of Central Christchurch has fallen, not risen. There are less businesses, shops, workers in Central Christchurch than previously. Long-term inner city Christchurch problems of transport and parking have been put in the ‘too hard’ basket and left for another generation to solve. Christchurch itself lost just over 2000 residents or nearly 1% of its population between the 2006 and 2013 censuses. Meanwhile the neighbouring Cantabrian councils of Waimakiriri grew by about 6500, or by close to 20%; Selwyn grew by 8700 — more than a third. Eric Crampton states these facts indicate prices and rents in downtown Christchurch, in particular the east side of the CBD should fall -not rise. A local property developer explains why.

Developer Ernest Duval, founder of the post-quake property owner’s group, City Owners Rebuild Entity (Core), says the whole dynamic of central Christchurch has lurched decisively west.

“If you look, all the people-focused amenities are on the west of the city. The new Metro Sports Centre, the museum, the Botanical Gardens, the Arts Centre — all of the things people want close by are on that side.”

Duval says Cathedral Square once told its own story. It was the city’s transport hub and cinema centre. It was the natural place of ceremony and assembly.

Yet under the Government’s blueprint plan, even the civic welcoming function of Cathedral Square is to be shifted over to Victoria Square. The idea is to make that the new bicultural front door to the city, a greeting place developed in partnership with Ngai Tahu.

Duval says because of the square’s threatened loss of post-quake identity, the surrounding blocks reaching down towards Manchester St have become problematic in turn.

The contagion now threatens the Government’s East Frame, its plan to sell off six expensively acquired blocks of land, stretching from the Avon River to Lichfield Street, for inner-city apartments.

Barnaby Bennett a designer and editor is a critic of the proposed convention centre.

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His argument (same link) has similar themes to the cargo cult mentality argument for the Eastern Frame in that what is happening is a result of stress and the need for the governing elite to appear in control.

Bennett says after disasters, the popular view is that it is the communities that can’t cope. There is looting and dysfunction. But as Christchurch found out, the opposite is mostly the case.

… it is instead the elite who fear they have the most to lose economically. “In the quest to appear to be in control, they often make foolish large decisions,” says Bennett.

He says it is the only reason he can see for the convention centre being made so large and taking over such a prime spot.

The Government forced through a purchase of all the properties between the square and the bend of the Avon River. It even decided to build over Gloucester Street without public consultation, saying it might make a nice internal shopping arcade.

I think Eric, Earnest and Barnaby are right and the result will be inner city Christchurch, especially on the east side, will be a sterile, expensive and a slowly built place compared to similar sized cities. Unless a new direction is found, this is a massive missed opportunity. The Canterbury region is New Zealand’s second largest region. Its population is growing much faster than the similar sized Wellington region and is only second to Auckland for population growth in the country. An expensive inner city area will reinforce the Canterbury trend of extreme decentralisation whereby businesses leave the centre and residents leave the city for neighbouring satellite towns and lifestyle blocks.

Guest Post: $1 billion Fletcher/Crown housing development — Christchurch CBD – Part 3

This is part three in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog.

You can read Part 1 and Part 2

Part 3: Is the Fletcher/Crown development exploitative?

Brendon Harre - Chch Part 3 - Henry George Sign

What did Mike Greer mean by “politicking on houses”? If one uses standard urban economic geography analysis to examine this situation we get some understanding of what he might of meant (note I have never met Mike Greer so this is an educated guess). The following graphs show how key variables of a typical city change from the centre to the edge of the city.

Kulish et al (2011) unconstrained

Visually these graphs would depict the following type of city.

Missing Middle

The key point is that house and land prices are typically higher in the city centre and decline towards the edge of the city. For cities it really is all about location, location, location.

Why are centrally located properties worth more than peripheral ones?

  • Centrally located properties are closer to public and private amenities — shops, parks, restaurants, entertainment, customers, employees and places of employment. This is a basic geometric law — the centre of a circle is the point closest to all other points within the circle. Note as cities get bigger they evolve secondary peaks and move from monocentric to polycentric. Also views, sun, proximity to waterfronts and other factors can skew this otherwise simple model but as a general rule the model is quite predictive.

So when one is discussing the property prices of a city you are really talking about a 3D curve. With site prices varying with location –x and y dimensions. But a city can be built in three dimensions –X,Y,Z or ‘out and up’. Businesses and residents choose where to locate themselves based on price, land area, floor area and whether to be more centrally or peripherally located.

The key features of the graphs being how high the central values are, what the median value is and how low the peripheral values are.

Actual land values in Greater Christchurch vary from industrial land in Izone Park and Carter’s Group Iport in Rolleston 20km South of Christchurch. A price list obtained by NBR shows lots being advertised for $125 a square metre up to $160 a square metre (in Rolleston). According to an industrial specialist Greg Mann, the price of similar land closer to the city at Wigram is $300–350 a square metre and at Hornby $225 a square metre. This price rises to around $1000 a square metre for the Crown’s purchases of central city land of the Eastern Frame and $3000 to $3,500 a square metre for land under the proposed convention centre adjacent to Cathedral square.

To reduce median property values to get affordable housing, the whole curve has to move lower, site prices in real terms have to be stable or falling in all locations. Construction costs have to be falling or at least stable for all locations. Then competition from cheaper new builds will cap rising prices of existing property.

There is an argument that cities need a supply vent that can quickly respond to increased demand to prevent excessive increases in land and property prices. That supply vent needs to be some combination of ‘up and out’. Typically affordable housing advocates such as Demographia argue that access to cheaper rural price fringe land through the competition effect keeps more centrally located city land prices lower and therefor median property prices affordable. They argue ‘up’ by itself is not enough to keep the property market stable. This article will focus on the other end of the market, on whether there is competition in the inner city section of the Christchurch property price curve. The underlying question is: does this section of the market need competition too?

Affordable housing has been a stated aim of this government since prior to their first election in 2008. How have their actions in rebuilding Christchurch since the earthquakes of 2010 and 2011 been towards achieving this aim?

The business model of the Fletcher/Crown agreement is that this entity would use it monopolistic control over a large part of the centre of Christchurch to extract the maximum profit possible from both the underlying land and the housing units. In other words to push up the city centre section of the property price curve as high as possible. It is hard to reconcile this monopolistic profit maximising business model against the governments long expressed goal of improving housing affordability.

Monopolistic suppliers achieve pricing power by restricting the amount supplied to the market in such a way that prices rise. In the real estate game this is called land banking. Typically land bankers exploit the difference between rising demand and inadequate new supply -delayed due to regulatory or infrastructure failure. The suspicion is that Fletchers Christchurch CBD development will price for the top dollar and if it doesn’t achieve that, it will slow construction down, until it receives the desired price. At the time Eastern Frame land was acquired by the Crown (with the threat of compulsory acquisition) many land owners questioned the morality of this “land banking acquisition process”. Many commenting on the Press’s article “Owners riled by eastern frame plan”. Here is a few examples.

Stolenbytheccdu 666 days ago

“Brownlee said the Crown did not stand to profit from on-selling parcels of frame land.” yeah right. The prices they paid for the eastern frame were low. The Government stole that land.
Freethinker 666 days ago

Great to hear Govt will make no profit on land sales so there will be no reason not to disclose the govts purchase and sale price and if there is a profit this can returned to the owners — and father christmas will visit all believers on 25/12 with a sack of goodies!!!

There has been an apartment building boom in many Australasian cities, sites for apartments have doubled in price in the past three years in Sydney, constructions costs are also rising. Vancouver in Canada is facing similar pressures. Is the Fletchers/Crown profit maximising entity trying to capture some of that boom? Australian and Canadian business commentators indicate the key driver of this apartment building and property price boom is off-shore investors. So Mike Greer may be right in that the CBD rebuild is not to service the local Christchurch community in an affordable manner. Instead, it is designed to create unearned capital gains opportunities for those outside of Christchurch. In the first instance the beneficiaries will be the Fletchers/Crown profit sharing partnership, whose priorities are nationally focused, rather than giving back to the Christchurch community. Off-shore property investors with a capital gains business model are a potential second wave of non-community beneficiaries.

The above analysis points towards a deliberate exploitative process, that the government is not interested in its market regulator duty of ensuring the property market provides affordable housing and low property related input costs for business. But the deliberate part may not be true, Gerry Brownlee the Earthquake Recovery minister firmly rejects any ‘conspiracy theory’ accusations of favouritism between the Crown and Fletchers.

Guest Post: $1 billion Fletcher/Crown housing development — Christchurch CBD – Part 2

This is part two in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog.

You can read Part 1 here.

Part 2. The Crown/Fletcher development within the context of the Christchurch rebuild and national economy

This is the hoped for Christchurch after the CBD is successfully developed.

Brendon Harre - Chch Part 2 - Fletcher Impression

To get an impression of where Fletchers intends to build, follow this link for pictures of the Christchurch city environment as it is now in 2015. You will see pictures of a damaged city core. Suburbs close to the centre of city abandoned due to the liquefaction risk. New suburbs being built further out, many in satellite towns like Rolleston and Lincoln.

Before the earthquakes, there were 6000 businesses in the central city, the area bounded by the four avenues, with a daily working population of 51,000. About 7000 residents lived in some 3500 households, mainly in the north-east corner. The hospital – one of the largest in Australasia – remains a big employer and government workers are coming back as damaged governmental buildings are repaired or replaced. However, the private sector commercial rebuild is slow, with many businesses committed to long term leases elsewhere in the city. Many offices have been built outside of Christchurch Central Development Units (CCDU) control east of the city centre on Lincoln Road and Victoria Street.

Brendon Harre - Chch Part 2 - Fletcher Impression 2

Brendon Harre - Chch Part 2 - Fletcher Impression 3

How much has the Crown spent on rebuilding Christchurch? Much less than people realise is chartered accountant Cam Preston’s answer. There was a significant initial amount of support, but since then the Crown has gone about reducing expectations and focusing on national issues rather than local rebuild goals – such as the government getting back into surplus. This has had ramifications for how the Eastern Frame development evolved.

Preston says what also catches his accountant’s eye is the way the Government used the cost share to capitalise as much of the Blueprint spending as possible.

That is, projects were treated not as operating expenditure — cash spending that would affect that year’s surplus calculation — but instead as a capital investment, something that was being bought by the state to produce an eventual financial return.

Once capitalised like this, the provision could be entered in a different column — rolled into the general national debt, the $80b of borrowings, to which no one was paying much attention.

As an accounting trick, Preston says the corporate world does this all the time. An expense becomes an asset. But it has consequences. It builds in assumptions that later have to be realised.

Take the $400m the Government has spent on compulsorily acquiring land for the anchor projects. That is money going out the door in any particular year. But because the land has been booked as a capital asset, it doesn’t come off the surplus figure. Rather it is something new the Crown owns as a positive investment.

Of course the expense will have to be reconciled one day when the anchor project actually gets built. If the Crown simply gives an anchor to the city as a gift — as people seemed to be getting the impression would be the case with the metro sports facility, the convention centre, the green frame — then suddenly that land investment will have zero value. Its purchase price has to be recognised as a cash out-going.

Or even if the Government has to acknowledge a write-down of the booked land value — as it very well might with the East Frame being sold now for apartment blocks having been bought originally at commercial building land prices — then again, ouch, a direct hit on the budget surplus column.

Preston says this is where some of the delays and secrecy that surround the anchor projects start to make more sense. The cost share shuffled a large chunk of the promised core Crown spend — he calculates $3.6b of the $8b non-EQC money — safely out of the surplus spotlight. The question is then when can the Government afford to take the hits involved in parking the expense?

For instance, it was an open secret that Fletcher Living had won the East Frame tender earlier this year. However the official announcement was bafflingly delayed until just the other week — a few days after the June 30 close of the 2014/2015 financial year.

And even then the Government was opaque about any write-downs. Brownlee claimed the Crown would see no loss on the land value. It would get back what it paid, he says.

However Fletcher will be acquiring the land over a decade to do the apartments in stages. And there is a complicated profit sharing arrangement that will not be finalised until the end of this year. Preston says all this looks like a way to keep the land cost tucked away on the right side of the surplus ledger.

For some reason Canterbury finds it hard to negotiate its local interest against national pressures. There is a despondency amongst locals that public bodies or services can be of help. There is much bitterness against all the government institutions involved in the rebuild. Both those representing the Crown — Brownlee, CCDU, CERA and Commissioner appointed Ecan and those representing the local interest — CCC.

Canterbury’s poor record of receiving national public spending for local infrastructure can best be seen in transport funding. The Canterbury and Wellington regions are of similar size, population and economy. Although Canterbury is the faster growing region. Yet somehow Wellington has 150km of passenger rail and, once Transmission Gully is finished, 100km of motorways. Meanwhile, once Christchurch’s Northern and Southern motorways and bypasses are completed it will have something like 30–40 km of motorways and no passenger rail. This being despite Canterbury having some of the easiest conditions for transport infrastructure construction and significant need for it.

MoT regional revenue vs expenditure chart

Peter Nunns from Transportblog said back in March regarding transport spending from 2002/03 to 2011/12.

A few things jump out from the chart. The first is that NZTA’s spent slightly more than it raised from fuel taxes, road user charges, and other sources. The second is that there are some big disparities between revenue and expenditure in some regions. In particular: Auckland and Wellington are getting about 20–25% more in NZTA expenditure than they pay in revenue, while Canterbury is getting only slightly more than half as much expenditure as it pays in revenue.

The newly elected Christchurch City Council have a positive vision for the future of Canterbury in which the Council and the Crown work together to create a much larger and more cohesive region, connecting a successful dense core to affordable more dispersed satellite towns. So far this vision has gained little traction at the national level.

The goal of Canterbury having 2 million people by 2050 may seem grandiose, but there is no doubt that Canterbury is one of New Zealand’s faster growing regions. With the right support, New Zealand could have a second international sized city – comparable to Adelaide. Christchurch is of a size and has the geography that with the right planning policies, infrastructure provision and a competitive/productive construction industry, new developments –homes and businesses could be built very affordably. An affordable growing Christchurch would contribute a lot to rebalancing New Zealand’s economy. Whether this happens or not is reflected in the large degree of uncertainty in Canterbury’s growth projections from Statistics NZ. Which range from either keeping up with Auckland to barely growing at all.

Statistics NZ's 2013-2043 population growth projections

Statistics NZ’s 2013-2043 population growth projections

A growing successful international sized city needs a functional inner city area. Will the Fletcher/Crown development provide this for Christchurch?

Guest Post: $1 billion Fletcher/Crown housing development — Christchurch CBD

This is part one in a five part series of guest posts on the Christchurch rebuild from reader Brendon Harre. It first appeared on the Making Christchurch blog

A case study of how our government approaches urban development.

The Christchurch post-earthquakes rebuild is peaking and construction activity will plateau for a while before tailing off. So this is a good time to review the Christchurch CBD rebuild model.

Five parts:

  1. The $1 billion Fletcher/Crown housing development.
  2. The Crown/Fletcher development within the context of the Christchurch rebuild and national economy.
  3. Is the Fletcher/Crown development exploitative?
  4. Is there another explanation?
  5. Is there another solution?
Part one: The $1 billion Fletcher/Crown housing project

A little over a decade ago in 2002 before I was married, I bought a small two bedroom, single garage townhouse in Kilmore Street in Central Christchurch for $160,000 on a single nurse’s salary. A decade later, after a series of devastating earthquakes in Christchurch, the Crown decided to take control of fourteen hectares of land. Seven hectares of that land, just a few blocks from my old townhouse, is being developed as part of the Eastern Frame development of the CBD rebuild.

So it is with great interest I follow the design/development stage of this process, in which Fletchers has negotiated an exclusive deal with the Crown to develop this large block of prime land. This development will be a mixture of apartments and townhouses. The Eastern Frame is approximately 20% of the inner city core of Christchurch. So the success or otherwise of this development will have a significant impact on New Zealand’s second largest city.

The East Frame is set on a 14 hectare site between Manchester and Madras Streets, and extends from Lichfield Street in the south to immediately north of the Ōtākaro/Avon River. It has easy access to a bus super stop on its west, Latimer Square to its East, the Innovation Precinct and CPIT to its south and the Margaret Mahy Family Playground to its North….

Half of the area will be developed into medium density residential living for approximately 2,200 people….. The other half of the East Frame will form open spaces and streets, including a central park running north to south, with walking and cycling paths, community gardens….

Brendon Harre - Chch Part 1 - East Frame

A simple division of the projected monetary size of development and the number housing units it will create, indicates the average price will be in excess of $800,000. A price that is out of reach from those on a nurse’s salary, in stark contrast to my experiences a little over a decade ago.

Brendon Harre - Chch Part 1 - East Frame 2

The Eastern Frame development is the biggest Government housing project in Christchurch. In combination with two other smaller Government housing projects, this provides more than $1 billion of work for Fletchers. The Eastern Frame project is budgeted to be worth $800 million and when completed it will have nearly a thousand residences. The first homes being planned to be ready in 18 months with the project expected to take 8 or 9 years to complete. The deal between the Crown and Fletcher is a profit sharing contract. This includes upfront payments to the Crown and further payments as sales are made. Simply put, as Fletcher completes and sells residences it shares the profits with the Crown.

Brownlee said there would be no loss to the Crown in terms of the sale of land to Fletchers. “Excluding the public realm there’s no loss on the land sold, to the Crown.” He would not give financial details and said the public land could eventually pass over to the care of the city council.

….Cera development director Rob Kerr said Fletcher had delivered the most compelling vision on the staged process. “As Fletchers sell more and more property, they’ll be paying us for the land. Depending exactly on how much they sell and how quickly they sell, that’s how much (land) we’ll sell.”…….

Mike Greer, a member of an opposing group who bid for the project was less impressed with this model of urban development and has spoken out about his concerns.

The unsuccessful bidders are putting on a brave face, but builder Mike Greer is more prepared to speak his mind.

Greer is hugely disappointed his bid with Philip Carter and Ngai Tahu failed to be selected by the Canterbury Earthquake Recovery Authority. He said the consortium had a top team including architects Warren and Mahoney and top Australian architect firm Woods Bagot…..

“They (Fletcher) are obviously doing a very good sell job to the Government, aren’t they. “I’m pretty disappointed a local bid didn’t get it. I think it’s pretty sad for Canterbury.” A local bid would have produced something much better, in his view.

“I guess they (Fletcher) offered more for the land than we did, that would be the biggest carrot for the Government, wouldn’t it.”

Greer said their proposal was “taller”, some eight storey apartment buildings, because they were planning for future population growth as well. It comprised 1200 apartments and townhouses in a price range of $300,000 to $1 million. The main part of their project was aimed at middle New Zealanders.

“We wanted to encourage policemen and nurses and all those kinds of people that work in the city to live in the city.”

“I think we would have created something far better for the people of Canterbury than what they are going to get.” “My biggest concern is they go offshore…to sell these as investment properties.” That would be devastating for the city, in his view.

It cost the consortium $600,000 spent to make the bid. “To be honest the whole process was a bit of a shemozzle, an absolute waste of money. I won’t be doing any bids ever again.”

“Our proposal was probably far too fancy for the Government, it looked after the people of Christchurch too much and didn’t provide a massive economic return for the bidder and the Government. Our bid was focused on building something world class.”

“It’s a funny old world this post earthquake world. There’s more politicking on houses than I ever imagined,” Greer said

In part 2 Brendon looks at the Crown/Fletcher development within the context of the Christchurch rebuild and national economy