Archive | Land use

Withdrawal pushes back CRL tender

City Rail Link Ltd, the joint venture between Auckland Council & the Government that’s building the rail link under the central city, said yesterday the withdrawal of a preferred bidder from the tunnels & stations process would delay the release of tender documents by up to 3 months.

CRL chief executive Chris Meale said it was too early to tell if the delay would roll on into the current project completion date of early 2024.

He said the withdrawal was disappointing but wouldn’t prevent progress on the tender, and discussions had already started with another prospective bidder: “We are fortunate that the initial lineup of 8 bidders for the project was exceptional and it was a hard choice to determine the top 2.”

Mr Meale said one of them made its own commercial decision to withdraw this week: “While we are naturally disappointed, we are moving on.”

Link: City rail link

Attribution: Company release.

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Trump infrastructure budget about mindset change

US president Donald Trump’s proposed extra infrastructure budget, announced yesterday, falls well short of the $US1 trillion he’d been talking about and he’s come in for widespread criticism because of that.

But what Mr Trump’s proposal is about is a mindset change.

He’s proposed $US200 billion of federal money for infrastructure – for now – and said it would be structured “to incentivise additional non-federal funding, reduce the cost associated with accepting federal dollars and ensure federal funds are leveraged such that the end result is at least $US1 trillion in total infrastructure spending”.

In his speechnotes, however, Mr Trump trumped that, saying his plan “will lead to at least $US1.5 trillion in investments to rebuild our failing infrastructure and develop innovative projects”.

According to a fact sheet that went out with the budget proposal, Mr Trump’s goal is to secure long-term changes because “the current system is not working”.

The fact sheet cited underperformance in many areas, “from our congested highways, which costs the country $US160 billion annually in lost productivity, to our deteriorating water systems, which experience 240,000 water main breaks annually”.

The response from Mr Trump: “We will re-evaluate the role for the federal government in infrastructure investment. For example, in the interstate system, the federal government now acts as a complicated, costly middleman between the collection of revenue and the expenditure of those funds by states & localities. Put simply, the administration will be exploring whether this arrangement still makes sense, or whether transferring additional responsibilities to the states is appropriate.

“As the administration develops policy & regulatory changes, and seeks statutory proposals working with Congress, we will focus on proposals that fall under the following key principles:

1, Make targeted federal investments: Focusing federal dollars on the most transformative projects & processes stretches the use & benefit of taxpayer funds. When federal funds are provided, they should be awarded to projects that address problems that are a high priority from the perspective of a region or the nation, or projects that lead to long-term changes in how infrastructure is designed, built & maintained

2, Encourage self-help: Many states, tribes & localities have stopped waiting for Washington to come to the rescue and have raised their own dedicated revenues for infrastructure. Localities are better equipped to understand the right level – & type – of infrastructure investments needed for their communities, and the federal government should support more communities moving toward a model of independence

3, Align infrastructure investment with entities best suited to provide sustained & efficient investment: The federal government provides services that non-federal entities, including the private sector, could deliver more efficiently. The administration will look for opportunities to appropriately divest from certain functions, which will provide better services for citizens, and potentially generate budgetary savings. The federal government can also be more efficient about disposing underused capital assets, ensuring those assets are put to their highest & best use

4, Leverage the private sector: The private sector can provide valuable benefits for the delivery of infrastructure, through better procurement methods, market discipline and a long-term focus on maintaining assets. While public-private partnerships will not be the solution to all infrastructure needs, they can help advance the nation’s most important, regionally significant projects.

System gone awry

What Mr Trump is talking about is a system gone badly awry: “The federal government inefficiently invests in non-federal infrastructure. In part, our lack of sustained progress has been due to confusion about the federal government’s role in infrastructure. During the construction of the interstate system, the federal government played a key role – collecting & distributing federal tax revenue to fund a project with a federal purpose. As we neared the completion of the interstate system, those tax receipts were redirected to projects with substantially weaker nexus to federal interests.

“The flexibility to use federal dollars to pay for essentially local infrastructure projects has created an unhealthy dynamic in which state & local governments delay projects in the hope of receiving federal funds. Over-reliance on federal grants & other federal funding can create a strong disincentive for non-federal revenue generation.

“At the same time, we continue to apply federal rules, regulations & mandates on virtually all infrastructure investments. This is despite the federal government contributing a very small percentage of total infrastructure spending. Approximately one-fifth of infrastructure spending is federal, while the other 4-fifths are roughly equally divided between state & local governments on one hand and the private sector on the other.

“Given these challenges, the administration’s goal is to seek long-term reforms on how infrastructure projects are regulated, funded, delivered & maintained. Providing more federal funding, on its own, is not the solution to our infrastructure challenges. Rather, we will work to fix underlying incentives, procedures & policies to spur better infrastructure decisions & outcomes, across a range of sectors.”

The New York Times said the $US4.4 trillion Trump budget proposal would add $US7 trillion to the federal deficit, but was largely irrelevant because the spending bill Congress passed last week outlined priorities.

It may be irrelevant in the immediate context, but not in the way the country functions long-term.

Among immediate measures to unshackle the population from the “federal government pays” thinking, Mr Trump would hand the nation’s air traffic control system over to the private sector, and expand the Veterans Affairs Department’s authority to lease out its vacant assets for commercial or mixed-use purposes and to speed its ability to pursue facility renovations & improvements: “Future [Veterans Affairs] reforms will encourage public-private partnerships and reduce barriers to acquisition, contracting & disposals.

Likewise, he’d sell the federal Power Marketing Administration’s transmission assets and lift the share of costs paid by commercial navigation users of inland waterways.

The Trump budget proposal contains examples of measures that would overcome limits on finance for transport projects, and on the potential for public-private partnerships’ participation, a measure to incentivise innovative approaches to mitigating traffic congestion, a change to the interstate highway tolling policy to open investment up, and changes to a clunky system that prevents private entities from making upgrades to federal facilities which would increase the rent on them.

Mr Trump’s appointment of a climate change denier, Scott Pruitt, as administrator of the Environmental Protection Authority – and subsequent elimination of climate change information from the authority’s website – has attracted attention.

The budget proposal puts forward a number of reforms to the environmental review & permitting process, which the Trump fact sheet describes as “fragmented, inefficient & unpredictable. Existing statutes have important & laudable objectives, but the lack of cohesiveness in their execution make the delivery of infrastructure projects more costly, unpredictable & time-consuming, all while adding little environmental protection. The administration will seek several proposals that will enhance the environmental review & permitting process.”

Mr Trump’s statement about his budget proposal indicates he’s more concerned with floss – the highways – than with the dross underground that is more likely to cripple aging communities – the utilities that need replacing, but which many communities no longer have the population, or working population, to fund.

Links: Budget infrastructure initiative fact sheet
White House announcement, 12 February 2018: Building a stronger America: President Donald J Trump’s American infrastructure initiative
Full Trump budget proposal

Attribution: White House, New York Times.

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Housing consents hold above 31,000/year, non-residential up 8%

Stats NZ said today building consents for new homes stayed just above an annual rate of 31,000 in December. In Auckland, the 10,867 consents were the highest level since 2004 and up 8.4% on 2016.

After 1752 consents nationally in January, consents were above 2100 every month and above 3000 twice.

The numbers of retirement village units, townhouses, flats & other units consented in Auckland in 2017 were records. There were also plenty of apartments consented, but not as many as in the early 2000s.

Stats NZ construction statistics manager Melissa McKenzie said: “Over a third of all new homes in New Zealand were consented in the Auckland region last year, which is in line with Auckland’s share of the New Zealand population. This is the first time since 2004 that the proportion of new homes consented in Auckland exceeded their share of the population.”

The 5549 multi-unit buildings consented in Auckland in 2017 were:

  • 2442 apartments – 75% of all apartments consented nationally
  • 868 retirement village units – a record high and accounting for 44% of all retirement village units consented nationally
  • 2239 townhouses, flats & units – a record high and accounting for 46% of all townhouses, flats & units consented nationally.

In contrast, only one-quarter (5318) of all new standalone house consents were for Auckland.

Non-residential up 8%

Building consents for all non-residential buildings including offices, education buildings, storage & cultural buildings were up 8% to $6.5 billion for the year.
Ms McKenzie said social & cultural buildings and hotels were the main contributors to the increase in value: “3 big projects consented last year were the NZ International Convention Centre, Auckland’s Aotea Centre and Turanga (Christchurch’s new central library). These boosted the category known as social, cultural & religious buildings.”

The non-residential building types with the highest value movements were:

  • social, cultural & religious – up $257 million to $630 million
  • hotels, motels & other short-term accommodation – up $208 million to $457 million
  • factories & industrial buildings – up $193 million to $662 million, and
  • education buildings – down $202 million to $1 billion.

Ms McKenzie said the decrease in the value of education buildings consented was mainly due to the boost of education-related consents in Auckland & Otago in 2016.

She said the increase in hotels, motels & other short-term accommodation consented coincided with a rise in international visitors: “Hotels in Auckland, Wellington, Christchurch & the Queenstown-Lakes district have contributed to this increase.”

The national consent numbers for December & the 2017 year (previous December & year in brackets):
Total consents for new homes: 2169 (2205), 31,087 (30,066)
Total values & floor areas for new homes: $953 million ($989 million), down 3.6%; 392,000m² (405,000m²), down 3.2%; $13.454 billion ($12.532 billion), up 7.4%; 5.493 million m² (5.47 million m²), up 0.4%
Standalone homes: 1424 (1580), 21,022 (21,310)
Apartments: 240 (138), 3239 (2403)
Retirement village units: 175 (193), 1951 (1952)
Suburban townhouses & flats: 330 (294), 4875 (4401)

Auckland residential consents for December, compared to December 2016, and the latest 12 months compared to the previous 12 months:
Region: 876 (740), 10,867 (9930)
Rodney: 58 (60), 1054 (866)
Albany:  53 (170), 2449 (2288)
North Shore: 105 (28), 561 (451)
Waitakere: 35 (43), 529 (676)
Waitemata & Gulf: 6 (9), 1362 (1041)
Whau: 33 (14), 331 (297)
Albert-Eden-Roskill: 53 (112), 644 (667)
Orakei: 14 (15), 260 (242)
Maungakiekie-Tamaki: 20 (129), 637 (416)
Howick: 42 (22), 614 (522)
Manukau: 225 (21), 655 (460)
Manurewa-Papakura: 94 (59), 987 (1066)
Franklin: 38 (58), 784 (938)

All construction for December compared to December 2016, and the latest 12 months compared to the previous 12 months:
Total: $1.468 billion ($1.612 billion), down 8.9%; $20.354 billion ($19.03 billion), up 7%
Non-residential: $485 million ($595 million), down 18.5%; $6.499 billion ($6.019 billion), up 8%.

Attribution: Stats NZ tables & releases.

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Offices replace apartments plan for Fanshawe St site, one of 4 sales worth total $50 million

Mansons TCLM Ltd intends to build an office building on the Fanshawe St site it bought in a mortgagee tender on behalf of interests associated with apartment developer Mohsen Haghi, who’d intended to build the Saba apartments there.

Part of the site was cleared for the apartments development last August, but the mortgagee sale sign went up at the same time.

Mansons has been a major office developer on Victoria St West, overlooking the Fanshawe St site, which is across the street from the former Vodafone building, now Auckland Transport’s headquarters. It’s also building the One55 Fanshawe office building on the former Caltex service station site at 155-167 Fanshawe St.

The company paid $5900/m² for the ex-Saba site, and $6000/m² for the ex-Caltex site at the end of 2016.

Sale of the ex-Saba site was one of 4 transactions completed by Bayleys agents, worth a total just under $50 million.

The others were on City Rd, back of the Langham Hotel, on Auburn St in Grafton, and the former church & theatre on East St, just off Karangahape Rd.

CBD

Uptown

9 City Rd:
Features: 1016m² site, 6-level 3358m² 1980s’ building, multiple tenants including some education providers, 5.5-year weighted average lease term, basement parking and a further 58 parking spaces in neighbouring building
Outcome: sold for $12 million at a 6.6% passing yield
Agents: Alan Haydock & Damien Bullick

3 East St, off Karangahape Rd.

3 East St:
Features: 878m² site in 2 titles, 1144m² early 20th century building previously used as a church & theatre
Outcome: sold with vacant possession for $3.5 million
Agents: Alan Haydock, James Hill & Shane Snjider

Victoria Quarter

136-142 Fanshawe St:
Features: 5210m² development site, near the intersection with Halsey St & opposite the KPMG and former Vodafone buildings; north facing with potential harbour, Victoria Park & cbd views; resource consent in place for apartment & parking development but likely to be redeveloped into an office building
Outcome: sold to Mansons TCLM in a mortgagee tender for $30.739 million at $5900/m²
Agents: Alan Haydock & Damien Bullick

Isthmus east

Grafton

12-16 Auburn St:
Features: 749m² site zoned mixed use, 762m² office & warehouse building, Tasman Machinery has 8-year lease from May 2017
Rent: $170,000/year net + gst
Outcome: sold for $3.5 million at a 4.86% yield
Agents: Alan Haydock & Phil Haydock

Attribution: Agency release.

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Trump changing longstanding rules of play on infrastructure

US president Donald Trump will win support for his infrastructure plan from those who want more self-help from cities on providing – and paying for – infrastructure.

The Axios website released a link (see below) to a draft of the infrastructure plan last week and the president may release detail of the actual plan in his state of the union address (starting 3pm today NZ time).

Strong Towns founder set the scene

The founder of the Strong Towns website in the US, Charles Marohn, wrote to the new president, Donald Trump, last January explaining how the normal method of federal money funding new infrastructure projects didn’t work, and the result was a nation of broken infrastructure.

It seems Mr Trump may have listened to some of that message – though more likely adopting his own view that just because he announced a $US1 trillion programme didn’t mean his sources would fund it.

Mr Marohn explained: “To borrow a real estate term, America’s infrastructure is a non-performing asset. For nearly every American city, the ongoing cost to service, maintain & replace it exceeds not only the available cashflow but the actual wealth that is created.

“For example, we did a deep financial study of the city of Lafayette, Louisiana. We found that the city had public infrastructure – roads, streets, sewer, water, drainage – with a replacement cost of $US32 billion. In comparison, the total tax base of Lafayette is just $US16 billion. Imagine building a $US250,000 home and needing an additional $US500,000 in infrastructure to support it. This seems incredible. But not only is it common, it is the default for cities across America.

“This imbalance is caused by incentives we embed in our current approach. When the federal government pays for a new interchange or the extension of utilities, local governments gladly accept that investment. The city, while spending little to no money of their own, has an immediate cash benefit from the jobs, permit fees & added tax base. The only thing the local government must do is promise to maintain the new infrastructure, a bill that won’t come due for decades.

“Here’s the catch: when we look at that bill, our cities almost always can’t pay it. Cities never run a return-on-investment analysis that includes replacement costs. Cities never even compute the tax base needed to financially sustain the investment. There’s no incentive to do it and every reason not to.”

Mr Marohn’s 4 principles for a solution:

  • Prioritise maintenance over new capacity
  • Prioritise small projects over large
  • Spend far more below ground than above, and
  • Prioritise neighbourhoods more than 75 years old.

Asked to comment on the leaked infrastructure plan this week, Mr Marohn commented: “My nightmare scenario was another Obama-style stimulus bill ($US831 billion total with $US105 billion spent on infrastructure) only focused on handing out federal dollars primarily for new highways, interchanges, frontage roads & other build-it-and-they-will-come kinds of investments. This is nowhere near that. Breathe a sigh of relief.

“Half of the undisclosed amount of money (widely believed to be in the $US200 billion range) would go into something called the Infrastructure Incentives Initiative. This has all the hallmarks of the worst of federal infrastructure spending: anything infrastructure-related is eligible, any government or public authority can apply, scoring is heavily weighted to induce local governments to take on lots of debt and there is only faint concern for long-term maintenance costs or return on investment. Yuck!

“But the plan has one provision that changes all of this: Grant awards can’t exceed 20% of total project costs… For a state or local government to get the federal money, they will need to have some serious skin in the game to the tune of 80% of the funding. If that provision makes it through Congress (count me doubtful), it would be transformative.

“With state & local governments picking up 80% of the tab, I suspect projects will naturally gravitate towards those of the smaller maintenance variety, particularly projects that have a positive return on investment (small, underground, and in older neighbourhoods).”

For this article, I’ve provided links to Axios & Strong Towns here, followed by further links & comment below that.

Links:
Axios, 23 January 2018: Scoop: Read the draft White House infrastructure plan
Axios, leaked draft
Strong Towns, 29 January 2018: A review of the White House infrastructure plan
Strong Towns, 23 January 2017: A letter to POTUS on infrastructure

Other views on infrastructure changes

Daniel Vock wrote on the Governing website: “At a time when many state transportation officials are clamouring for more financial help from Washington, an outline of the president’s infrastructure plan depends heavily on an influx of state & private funds.”

Governing, 22 January 2018: Leaked Trump infrastructure plan would put onus on states

In a second story, about where the money would come from and its journey to the user, he wrote: “When big-city mayors met in Washington last week, one of their primary messages regarding infrastructure was that the federal government should send new money directly to cities, rather than through states. The Trump administration seems open to the idea.”

Politico said: “The president’s long-awaited infrastructure package will expect cities & states to pick up much more of the costs for their projects.

In its coverage of the plan, Laura Gardner wrote: “President Donald Trump won the White House promising a $US1 trillion, 10-year blueprint to rebuild America — an initiative he said would create millions of jobs while making the nation’s highways, bridges, railroad & airports ‘second to none’.

“But the infrastructure plan he’s poised to pitch in Tuesday’s State of the Union is already drawing comparisons to The Hunger Games.

“Instead of the grand, New Deal-style public works programme that Trump’s eye-popping price tag implies, Democratic lawmakers & mayors fear the plan would set up a vicious, zero-sum scramble for a relatively meagre amount of federal cash — while forcing cities & states to scrounge up more of their own money, bringing a surge of privately financed toll roads, and shredding regulations in the name of building projects faster.

“The federal share of the decade-long programme would be $US200 billion, a sum Trump himself concedes is ‘not a large amount’. The White House contends it would lure a far larger pool of state, local & private money off the sidelines, steering as much as $US1.8 trillion to needs as diverse as highways, rural broadband service, drinking water systems & veterans hospitals.”

Politico noted that what the Trump plan did signal was a move away from the policy of the federal government deciding everything, and trickling tax money back to the states, with tags. Laura Gardner wrote: “The White House defends its approach as an overdue shift from decades of federal spending & control.”

She quoted a statement from deputy White House press secretary Lindsay Walters: “The Washington establishment still thinks that infrastructure can only be built correctly if they make all the decisions and control the purse strings, but one look at the crumbling bridges & roads across America shows that approach has failed.

“Instead of sending taxpayer money to DC only to have it eventually trickle back down to communities along with a host of new restrictions & requirements, the president wants to allow communities to keep more of their funds and make their own decisions, and to simplify the federal bureaucratic maze.”

Governing, 29 January 2018: Mayors sceptical of trump infrastructure plan
Politico, 28 January 2018: Trump’s $US1 trillion plan inspires ‘Hunger Games’ angst
Politico, 9 November 2016: Donald Trump victory speech 2016, full video

Attribution: Axios, Strong Towns, Politico, Governing.

 

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Collins raises scare about “road tax” diversion, but government fund already $½ billion in red

Former Cabinet Minister Judith Collins, now the National Opposition’s transport spokesperson, raised a scare this week that the new government would divert National Land Transport Fund money from major road projects to rail.

2 things she neglected to mention:

1, while the fund’s income comes largely (but not entirely) from road users, it has always referred to its “land transport” programme rather than to “roads”.

2, it will be a long time before the fund has any money to spend on anything. Its annual reports for the last 2 years disclose that the fund’s liabilities exceeded its assets by $497 million at June 2016, rising to a $528 million deficit at June 2017.

It had budgeted for a $40 million surplus at June 2017.

The fund’s 3 biggest spends in the last financial year were on the accelerated Auckland transport programme ($236 million), public-private partnerships (for highway development, $557 million) & Tauranga’s eastern link toll road ($107 million).

The fund’s income is derived from “all revenue from fuel excise duty, road user charges, motor vehicle registration & licensing fees, revenues from Crown appropriations, management of Crown land interest, and tolling”.

The fund uses this income to manage the funding of the road policing programme, the national land transport programme & activities such as transport planning.

The fund’s last annual report says: “The National Land Transport Fund has a negative general funds balance due to the programmes that were accelerated and current funding was sourced from the Crown. The funding received has been recognised as long-term payables, which are not due until 2-27 years from balance date.

“The fund has the option to slow down expenditure on the national land transport programme, or utilise the short-term borrowing facility of $250 million if required to meet obligations as they fall due in the short term.”

Congestion issues

Auckland – a region where traffic grinds to a halt daily – has a serious, and growing, campaign to get more people to commute by rail, reducing road traffic, but it still has to work out how to handle freight much more efficiently.

The biggest proposal for improving freight movement, the East-West Link through Penrose & Onehunga, won consent from a board of inquiry in November, confirmed by its report & final decision on 21 December. But, by then, the incoming government had canned the project.

Collins on Labour’s “pet” obsession

Ms Collins said in a release on Monday the new government’s transport minister, Phil Twyford, “has confirmed the government is considering diverting taxes paid by motorists who want better roads to rail instead, while insisting to media this won’t happen.

“This is an important principle, adhered to by successive governments, ensuring the specific taxes paid by motorists are invested in newer, safer & better roads – helping keep New Zealanders connected & safe. Road users pay taxes which are directly returned to them.

“But this now appears under threat, because of the Labour Party’s obsession with light rail in Auckland. Mr Twyford has written to stakeholders saying a number of changes to the government policy statement (GPS) on land transport are being considered. Among the proposals is ‘exploring how rail investment is incorporated within the GPS & the National Land Transport Fund’.

“This is in spite of his office telling media last week that funding for road upgrades would not be redirected to rail.

“In his rush to erroneously claim that a number of roading projects aren’t under threat because of the Government’s obsession with Auckland rail, Mr Twyford has been saying different things to different people.

“This desperate grab for more taxes is the result of this free-spending government realising how much it’s going to cost to build its pet rail line from Auckland’s cbd to the airport – so it’s looking to divert funding from regional roads as a result.

“The National Land Transport Fund is paid for by road users to be invested in improving New Zealand’s roading network and it should remain that way. The Government needs to check its priorities and ensure the taxes paid by road users are invested back in the roads they are using.

“Last week, National launched a series of petitions aimed at saving those regional roads that the Government is looking to slash funding for. Given this duplicity from the Government, I want to again encourage everyone to sign the petitions to save our roads,” Ms Collins said.

Twyford signalled his intention

Mr Twyford wrote in a column for Contractor magazine last week: “To achieve our vision for transport, change is necessary. I am interested in how we can best use existing funding tools – like the National Land Transport Fund & the Government Policy Statement (GPS) – to support a more multi-modal approach.

“The traditional way in which we finance & fund infrastructure needs to change if we are going to address the multiple challenges of urban growth, replacing ageing assets, meeting higher environmental standards & improving resilience. We believe we need to be smarter about how we use the Government’s balance sheet.”

Mr Twyford wrote that the challenges of population & freight growth in the “golden triangle” of Auckland-Bay of Plenty-Waikato “will not be solved solely by investment in the roading network. All modes can be complementary to each other.

“For example, the Government is committed to implementing a rapid transit system for Auckland, which will include light rail from the cbd to the airport and to west Auckland. Such an investment will not only make it easier for people to get around town, but it will also free up our roading network to improve freight efficiency.”

The National petitions

National MPs began launching their petitions a fortnight ago.

Whangarei & Northland MPs Shane Reti & Matt King’s petition calls for the Auckland-Whangarei 4-lane “road of national significance” to proceed as the previous government planned it.

In Auckland’s eastern suburbs, MPs Jami-Lee Ross (Botany), Simeon Brown (Pakuranga) & Denise Lee (Maungakiekie) launched their petition to support the East-West Link.

They commented: “After a decade of planning & $50 million of investigative spending, you would expect that there was a clear direction on the project. This project has been through a fine-toothed procedural process like no other. It is supported by council, iwi, and has been approved by the Environmental Protection Agency’s board of inquiry.

“The current gridlock is a major barrier to commerce. This is making it difficult for people getting access to their basic daily goods. It is quite literally the bread & butter of transport projects.”

Links:
Contractor, 15 January 2018: Infrastructure & transport
National Party petitions: Save our regional highway projects

Attribution: National Party releases, Contractor.

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Auckland jump pushes home consents over 31,000/year, standalone share drops further

Consents for new homes jumped over the 31,000/year mark in November after being stuck in a 30,000/year band for most of the previous year.

Stats NZ said today the number of new homes consented in Auckland hit a 15-year high of 1450 in November, boosted by apartments. You can check the numbers around Auckland’s 13 wards below.

This rise in Auckland helped lift the national total of new homes consented to a 13-year high.

Consents for new homes & upgrades nationally for the year were worth $930 million more than for the previous 12 months.

Stats NZ construction statistics manager Melissa McKenzie said: “In November, Auckland home consents reached their second-highest level on record. This is beaten only by October 2002, when nearly 2000 new homes were consented due to a much larger spike in apartments.”

Nationally, 3262 new homes were consented in November (3005 in November 2016), including the highest number of townhouses, flats & units on record – 577 – and a 9-year high of 543 apartments.

“November is typically the month with the highest number of new homes consented, as people try to get plans approved before Christmas,” Ms McKenzie said.

“November’s rebound in home consents was driven by apartments, which tend to fluctuate a lot and were particularly low in October.
“Looking at the longer-term picture, building consents for apartments & townhouses have seen double-digit growth year after year, while consents for standalone houses have levelled off.”

Standalone homes’ share of total consents for the year fell from 70.4% in November 2016 to 68%.

The national consent numbers for November & the year to November (previous November & year in brackets):
Total consents for new homes: 3262 (3005), 31,123 (30,399)
Total values for new homes:  $1.118 billion ($1.001 billion), $13.49 billion ($12.561 billion)
Standalone homes: 1870 (1886), 21,178 (21,391)
Apartments: 543 (407), 3137 (2692)
Retirement village units: 272 (205), 1969 (1918)
Suburban townhouses & flats: 577 (507), 4839 (4398)

Auckland residential consents for November, compared to November 2016, and the latest 12 months compared to the previous 12 months:
Region: 1450 (1188), 10,731 (10,137)
Rodney: 89 (55), 1056 (909)
Albany: 255 (286), 2466 (2274)
North Shore: 25 (26), 484 (566)
Waitakere: 66 (84), 537 (664)
Waitemata & Gulf: 388 (155), 1365 (1125)
Whau: 34 (19), 312 (307)
Albert-Eden-Roskill: 36 (104), 703 (699)
Orakei: 67 (42), 261 (297)
Maungakiekie-Tamaki: 138 (21), 746 (306)
Howick: 127 (25), 594 (546)
Manukau: 90 (129), 451 (465)
Manurewa-Papakura: 88 (116), 952 (1062)
Franklin: 47 (126), 804 (917)

All construction for November compared to November 2016, and the latest 12 months compared to the previous 12 months:
Total: $1.881 billion ($1.607 billion), up 17.1%; $20.498 billion ($19.029 billion), up 7.7%
Non-residential: $549 million ($411 million), up 33.6%; $6.609 billion ($5.98 billion), up 10.5%.

Attribution: Stats NZ tables & release.

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KGL unveils plans for Hamilton East refurb

KGL Property unveiled plans this week for a $6 million refurbishment of the 1970s-built 1

Clyde St in Hamilton East, to start in mid-2018.

In an innovation by the founders of outdoor gear retailer Torpedo7 Ltd, Luke Howard-Willis & his father Guy, the renovations on Clyde St will create what they think will be the largest modern, shared office space in Hamilton.

The Howard-Willises sold a majority stake in Torpedo7 to The Warehouse Ltd in 2013, and exited completely early last year. 2 months later they bought 1 Clyde St from Hill Laboratories Ltd, which moved to new headquarters in the former NZ Post building on Duke St, Frankton – also owned by the Howard-Willises’ KGL Property.

KGL Property entered a joint venture early this year with Foster Construction Ltd and the partners will work together on the Clyde St refurbishment project.

Foster’s commercial manager, Leonard Gardner, said:  “The building’s main structure will stay as is, but we’ll strip it right down to the concrete and reclad it with modern construction materials. In addition to a new modern look inside, we’ll also install new mechanical & electrical kit through the building. The internal & external facelift will also keep in character with Hamilton East’s unique community & the surrounding buildings.”

KGL commercial property manager Ray George said: “Hamilton East has been revitalised over the past few years, making it the perfect location to host a shared office space.

“The neighbouring Deloitte building opened in 2009, Ebbett Prestige’s Volkswagen & Audi dealership opened opposite in 2015 and the Mavis & Co Café integrates into the precinct’s design. The location gives access to the Waikato River as well as to local amenity such as parks, river walks, cafes & gyms.

“A shared office environment is a great option for businesses as it allows them to expand quickly without the large capital costs of setting up an office with associated infrastructure. The interaction within the common open plan environment also facilitates cross-pollination of ideas.”

The 3-storey building, with 2700m² of floor area, will be able to accommodate 200-

225 staff on site. One of the floors will be the shared space, and the other 2 will be leased to corporate tenants.

Attribution: Company release.

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Construction rising but more slowly

The rise in building work put in place dipped again in the year to September, as it did in 2015.

It still rose – by 10.4% for all buildings, 13% for residential – but those increases were down from a total 17.3% increase for all construction in 2016 and a 20.2% increase in 2014, and from 19.3% for residential in 2016, 26.2% in 2014.

In current dollar terms, residential work in the 12 months to September was worth $13.6 billion ($12 billion the previous 12 months). Total work was worth $20.93 billion ($18.95 billion in the previous 12 months).

Statistics NZ said the volume trend for all building work was 0.6% below the series peak reached in the September 2016 quarter. (This series began in the December 1989 quarter, so doesn’t include the mid-1970s residential building boom seen in building consent statistics).

For the September quarter, the value of residential work rose 9.7% from a year ago to $3.6 billion ($3.29 billion), and the total rose 6.4% to $5.5 billion ($5.18 billion).

Methodology to change

Statistics NZ said it would raise the value threshold used to determine which building project activity is modelled from consent data, and which activity is surveyed in the quarterly building activity survey, in the December quarter. “This change will reflect recent inflation in construction industry costs. This will not affect any activity already being surveyed, only the data source for new projects being monitored, and will therefore not cause any revisions to historic value of building work put in place statistics.”

Statistics NZ will publish more information about these changes at its next release on the value of building work put in place, for the December quarter, to be published on 7 March.

Attribution: Statistics NZ tables & release.

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Victorian taskforce detects cladding blindspot, but 8 hospitals are being reclad

A cladding taskforce the Victoria government established in July has found extensive compliance issues. And, as products became more prevalent & visible, “a general complacency or blind spot occurred as to the risks”.

Outside the taskforce’s report, state planning minister Richard Wynne said in a release that cladding had to be replaced at 8 hospitals and another 12 hospitals remained “under assessment”.

The state government established the taskforce to investigate the extent of non-compliant external wall cladding on buildings statewide, and make recommendations for improvements to protect the public and restore confidence that building & fire safety issues are being addressed appropriately.

The fire that ripped up the Grenfell apartment tower in London in June, moving vertically via the external cladding, resulted in a confirmed 71 deaths. 350 people were evacuated from the building.

But the alarm bells were raised in Melbourne’s Docklands 3 years ago, when the same thing happened in the Lacrosse apartment building – that time without any deaths.

The Victorian taskforce has found systems failures had led to major safety risks & widespread non-compliant use of combustible cladding.

An audit by the Victorian Building Authority after the Lacrosse fire confirmed the extent of non-compliance.

The taskforce said in its interim report, out last Friday: “We found the failings identified by the Victorian Building Authority in 2015 were not merely administrative, or paper-based, but were significant public safety issues, which are symptomatic of broader non-compliance across a range of areas within the industry.

“The problem of widespread non-compliant cladding can be attributed to 3 factors: the supply & marketing of inappropriate building materials, a poor culture of compliance in the industry, and the failure of the regulatory system to deal with these issues.”

The taskforce tapped into the expertise of industry professionals & organisations through a stakeholder reference group, and summarised their submissions:

  • inadequate compliance & enforcement and low risk of consequences to deter breaches of the law
  • competitive commercial pressures which incentivise the taking of shortcuts
  • over-reliance on the building surveyor role as an assurance mechanism
  • inadequate onsite inspection, supervision & quality assurance
  • inaccurate & potentially misleading labelling &/or marketing of products
  • complexity, ambiguities & poor understanding of the application of the national construction code and how to comply with it
  • variations in regulations & codes and their inconsistent interpretation over time regarding combustibility tests & use of panels
  • a widely held view that combustibility standards in the national construction code are too onerous and stifle new product innovation
  • substitution of non-compliant products between the approval & construction phases
  • incorrect, inadequate or misleading documentation, including product certificates
  • poor quality workmanship, or inexperienced professionals, highlighting a general need to increase skills & capabilities among building practitioners, and
  • poor understanding of performance-based solutions, evidentiary requirements & inadequate oversight.

The taskforce said aluminium composite panels with a polyethylene core were of particular concern: “This type of cladding has been implicated at Grenfell & Lacrosse and is combustible. Rendered expanded polystyrene cladding is also of concern.”

Australia’s national construction code requires that external walls of buildings, 3 storeys & above, must be non-combustible. This includes cladding affixed to or forming part of an external wall.

The taskforce identified up to 1400 buildings as most likely having aluminium composite panels with a polyethylene core or expanded polystyrene.

The state government said no building had required an evacuation order, “provided certain safety measures are met while rectification works are carried out, such as alarms, sprinklers or evacuation procedures”.

But the government directed its building authority to inspect more worksites & buildings, including a statewide audit of residential buildings likely to have combustible cladding.

And the state’s health & human services department said an audit of 1100 buildings had identified 8 hospitals where non-compliant cladding must be replaced. Another 12 hospitals remained “under assessment”.

Links:
1 December 2017: Victorian cladding taskforce, interim report
Lacrosse Tower fire, Melbourne Docklands 2014, city surveyor’s report

Attribution: Taskforce & ministerial releases.

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