In what may be an ominous sign for the construction industry there has been a significant downturn in the amount of commercial building space being consented in Auckland.
Statistics NZ figures show that the value of new commercial building consents issued in Auckland dropped from $228.2 million in the first quarter of this year, to $153 million in the second quarter and $146.8 million in the third quarter.
That has been matched by a slide in the value of commercial consents issued as a percentage of the national total, which has fallen from 67% in the first quarter of this year to 48% in the third quarter.
The decline in new commercial space was across all four of the main types of commercial premises - retail, office, storage/warehouses and factories/industrial.
It was most noticeable with retail, with just 10,251 square metres of new retail space consented in the third quarter of this year, about a quarter of what was consented in each of the previous three quarters and the lowest amount of new retail space consented in Auckland since the fourth quarter of 2017.
The figures also suggest that most of the new space consented in the third quarter of this year was for smaller projects, with the average floor area of new retail projects consented in Q3 2019 dropping to 513 square metres, roughly a third of the average over the previous three quarters.
The amount of new office space being consented in Auckland is also down sharply, falling from 37,512 square metres in the first quarter of this year to 14,581 square metres in the second quarter and 13,481 in the third quarter.
Over the same period the average floor area of new office projects consented in Auckland dropped form 1786 square metres to 613 square metres.
Consents for new storage buildings such as warehouses were also down, with 53,913 square metres of new storage space consented in Auckland in the third quarter.
However, that was possibly less surprising because of the very high levels of new storage space consented in the previous two quarters, with a record 178,755 square metres consented in the second quarter of this year and 106,123 square metres consented in the first quarter.
The amount of new factory/industrial space consented in Auckland dropped back to 21,733 square metres in the third quarter of this year from 42,144 square metres in the second quarter.
The downturn in new commercial consents being issued in Auckland may mark a turning point in the construction sector because Auckland has increasingly dominated the commercial premises construction market over the last few years.
In the 12 months to September this year, Auckland accounted 57% of new commercial building consents (by value) throughout the country, including 59% of new retail consents, 54% of new office consents, 53% of new storage consents but just 26% of new factory/industrial consents.
However, if the downturn in Auckland's commercial consents that's been evident over the last couple of quarters turns into a longer term trend it may have a silver lining, by releasing more resources into the residential construction sector, which is still facing capacity constraints.
- Readers interested in commercial property should check out our Commercial Property Sales page, which has photographs and details of commercial property sales from around the country, including selling prices and yields.
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