Construction of commercial buildings should continue at record levels in Auckland and Waikato over the next couple of years, although the outlook in other regions is more mixed.
According to Statistics NZ, consents were issued for a record $682 million of new commercial buildings in Auckland last year, excluding the costs of land and other non-construction costs, and that comes after three very strong years in which commercial consents were well above $500 million a year.
The demand for warehouse space was one of the main drivers of that growth, with consents issued for a record 383,564 square metres of new storage buildings in Auckland last year, with a record value of $384 million.
Demand for accommodation in the hospitality sector was also a major factor, with consents issued for 85,434 square metres of new commercial accommodation space such as motels and hotels, which was a 21 year record.
New factory space consented dropped back from 143,675 square metres in 2018 to 105,014 square metres last year, but remained substantially above the levels consented between 2009 and 2017.
Consents for new office space more than doubled to 93,470 square metres last year, compared to 43,461 square metres in 2018, but remained below the levels of 2014-2017 when more than 100,000 square metres a new office space a year was consented.
Retail went against the trend with a sharp decline in the amount of new retail space consented in Auckland last year, dropping back from the record 256,612 square metres consented in 2018 to 107,572 square metres last year.
However much the retail space consented last year was probably of higher value, with the average value of retail consents issued last year coming at $3496 per square metre. This was an all time high and more than double the 2018 average of $1634 per square metre.
The Waikato is also experiencing a commercial construction boom, with a record $127.1 million of new commercial buildings consented in the region last year, more than double the $60.7 million consented in 2018.
That growth was mainly driven by big increases in consents for factories of $134.5 million (up 37% compared to 2018), offices $67.8 million (+78%) and retail space $59.3 million (+161%).
So tower cranes, concrete trucks and traffic cones are likes to remain features of the landscapes in Auckland and Hamilton for some time.
However drivers and pedestrians may get a bit of relief from construction activity in other centres.
In the Bay of Plenty the value of consents for new commercial space plunged dramatically, from $113 million in 2018 to $57 million in 2019, which was its lowest level in five years.
And commercial construction in the Wellington Region can be a bit like its weather - changeable.
Last year consents for $57.2 million of construction work for new commercial space were issued in Wellington, up from $39.2 million in 2018 but the second lowest level since 2013, and less than a third of the value of the commercial consents issued in Wellington 2016.
In Otago the outlook for commercial construction is basically flat, with $54.5 million of commercial consents issued last year, up just 2.2% compared to 2018.
Not surprisingly the big downward move in consents issued for new commercial space last year was in Canterbury, where their total value was $128 million last year, down 49% compared to 2018 and down million last year and down 80% since the 2014 peak of $636 million.
That puts Canterbury within a hair's breadth of being overtaken by Waikato for having the second highest level of new commercial consents issued in the country.
Across the entire country the value of consents issued for new commercial space was $1.211 billion last year, down just a smidgen from the $1.243 billion issued in 2018. That means the overall contribution to the economy from commercial construction is likely to stay around existing levels for at least the next year or two, although it's likely to be increasingly concentrated in the upper North Island.
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