Marcus Beveridge Queen City Law principal was recently quoted in a NZ Herald article on the building bonanza tipped for Auckland.
The article is reproduced for our readers below:
Business growth forecasts are so strong that Auckland is facing a big building shortage and needs 18 more PwC Towers, 18 more Metropolis blocks and 18 new malls like Downtown at the foot of Queen St, says a property expert.
Alan McMahon, Colliers International’s national director of research and consulting, said that by 2031 when an extra 500,000 people were forecast to live here, 54 new buildings the same size as PwC, Metropolis and Downtown would be needed.
“New floor space equivalent to one each of the three buildings will need to be constructed every year for the next 18 years if the CBD is to accommodate forecast demand,” McMahon said.
“Significantly more construction is needed for the CBD to accommodate the growing numbers of businesses, residents and retailers which are expected to move in over the next 18 years.”
Auckland was facing a serious future undersupply of property, he said, backing up comments from developer Culum Manson of Mansons TCLM who on Saturday forecast a big jump in building work and construction prices, driven by rising demand for office buildings alone.
Marcus Beveridge of Queen City Law said the city’s fast-rising tower crane population would soon burgeon when work started on the SkyCity Convention Centre and Conrad’s Urba, Queens Residences and Parkside apartments.
Geoff Cooper, Auckland Council’s chief economist, said Colliers had done well to reiterate the growth of one of the country’s most productive business areas.
“Ensuring an adequate supply of new floor space for commercial activities and apartments for residents in the city centre is among the most important planning challenges for Auckland in the years to come,” Cooper said.
McMahon said the CBD would need 1.92 million sq m of office floor space in the next 18 years.
“Assuming an average workspace ratio of 17sq m to employee, we calculate that to accommodate the same CBD office worker to population ratio in 2031, over half a million square metres of new office space will need to be constructed, roughly equivalent to one PwC Tower going up every year for the next 18 years.”
Prime office vacancy levels were already low so there was tremendous potential for developers to meet current and forecast demand for office space, he said.
“As the economic environment continues to improve and businesses grow, the current amount of office space provided in the Auckland CBD is simply not going to be sufficient a few years down the track. Developers who are prepared to undertake a degree of speculation will prosper,” McMahon said, citing the Wynyard Quarter which is emerging as a viable alternative to the core CBD.
The CBD’s 26,307 residential population could rise 82 per cent to 47,850 people by 2031 so new apartment buildings were needed.
“Statistics NZ expects Auckland CBD’s population to grow at a faster rate than the rest of Auckland and also at a faster rate than New Zealand’s total population growth. By 2031 the CBD population is expected to make up 2.4 per cent of Auckland’s total population, compared with 1.6 per cent in 2011,” McMahon said.
The current total retail floor space in the Auckland CBD is 266,800sq m, equating to just over 10sq m per CBD resident.
“Based on expected population growth, the CBD will need 485,284 sq m of [new] retail floor space in 2031 to achieve the same ratio per resident,” McMahon said.
“The case for construction of new retail space in the CBD is even stronger given the increasing popularity of inner-city living, which is boosting apartment construction around the CBD fringe. Research shows people like to shop locally, with 50 per cent of shopping done within 5km of home,” McMahon said, citing Auckland Council data.
“With the CBD’s population expected to increase as new apartment developments are completed, the demand for shops in the CBD will also grow,” McMahon said.