The ubiquitous Sydney 3-floor walkup, made popular over 60 years ago when new regulations required a lift in apartment buildings over 3 storeys, is at last starting to attract attention in Auckland.
CBRE Research NZ senior director Zoltan Moricz and research analyst Tamba Carleton say in a paper out today that walkup projects in the development pipeline have increased from 5 in March 2015 to 17 this month.
Over those 2 years, according to CBRE research, the whole apartment development pipeline has grown from 68 projects to 121, and the number of units in them from 4700 to 8600.
Mr Moricz & Ms Carleton said: “The apartment pipeline has undergone significant change in response to the evolution of market fundamentals as Auckland continues through its third apartment development cycle.
“Some of the challenges facing the sector that have recently garnered attention include: rising construction costs, tougher bank lending criteria & presale requirements, the effect of loan:value ratio rules and affordability. These & other factors have influenced the emergence of a ‘walkup’ style of apartment living, driven by a lower construction cost that has a flow-on effect through relative affordability to appeal to a wider demand base and enhance project feasibility.”
Walkups are defined as vertically attached dwellings that are in 2- or 3-storey buildings. They differ from terraced housing, which is defined as horizontally attached dwellings.
The apartment tradition in Auckland & Wellington is for buildings over 3 storeys, but the CBRE researchers said one of the main drivers of growth had been the significantly lower construction cost of walkups compared to traditional apartment building costs: “While construction costs for walkups in Auckland are broadly similar to terraced housing, they are about two-thirds the cost of traditional apartments. This proportion decreases further as traditional apartment building scale increases.
“In general, walkups are less complex to build than traditional apartment buildings and do not incur additional costs related to sprinkler systems & elevators, which are mandatory for buildings that are 4 or more levels in height.
“There is a separate issue affecting construction costs of high density projects, in that fewer construction companies have the capability & resources to undertake projects over a certain size, which pushes up the construction cost of highrise buildings.”
For the current Auckland apartment pipeline, the average cost/m² across all projects was 30% above the average for walk-ups, and that difference flowed through to the time it took to sell a project down: “While there are material differences between projects, walkups tend to sell down over 90% within 3 quarters of launch, compared to 60% for traditional apartments.”
Auckland’s new unitary plan will also make a difference, as the impact of rezoning the bulk of suburbia to enable more intensive development starts to be felt.
Attribution: Agency research.