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The timing for the completion of a swag of new commercial building projects could not be worse as we stare down the barrel of recession

The timing for the completion of a swag of new commercial building projects could not be worse as we stare down the barrel of recession

The country's commercial property market is likely to be hit by a wave of new properties being completed, just as demand for commercial premises starts to soften during an expected recession.

The latest figures from Statistics NZ show that building consents for new commercial buildings have been running at elevated levels for most types of commercial premises and it's likely that much of that additional space will be completed in the next 12 months.

The table below shows how much new space (in square metres) was consented for offices, hotels/motels, shops/restaurants/bars, factories and storage buildings such as warehouses, in each 12 month period ending March, from 2015 to 2020, both nationally and in each of the Auckland, Wellington and Canterbury regions.

The final column on the right, (in the table below), shows how much new space was consented in the 24 months to March this year, with most of that work likely to still be at various stages of construction.

This shows that in the 24 months to the end of March this year, 293,762 square metres of new hotel/motel space was consented throughout the country, with half of that being in Auckland.

That was an average of almost 147,000 square metres a year, compared to an average of just over 76,000 square metres a year over the previous four years.

That is particularly concerning because the accommodation sector has been one of the most severely hit sectors by the fallout from the COVID-19 lockdown and is likely to remain so for some time, and also because hotels are among the most costly types of properties to build.

The estimated construction costs of hotels/motels consented in the three years to the end of March this year was $4169 per square metre, compared to $3443 per square metre for apartments and $2039 per square metre for offices.

Consents for new retail premises such as shops, restaurants and bars have also been running at elevated levels, with 705,805 square metres of new space consented in the 24 months to March this year, with slightly more than half (52%) of that being in Auckland.

Nationally, that was an average of just under 353,000 square metres a year, compared to an average of 259,000 square metres a year over the previous four years.

There were also big increases in the amount of new industrial buildings such as factories and warehouses that were consented over the last two years, particularly in Auckland.

In the 24 months to March, 1.48 million square metres of storage facility space was consented throughout the country, which is an average of 740,000 square metres a year, compared to an average 630,000 square metres a year over the previous four years.

Although demand for warehouse space may be bolstered by increased use of online shopping, it will not escape the effects of a prolonged recession that could see an overall drop in the level of goods being stored and transported. This in turn could reduce demand for space from the logistics industry.

Going against the trend, only 331,000 square metres of new office space was consented in the 24 months to March this year, an average of 165,000 square metres a year, which was well down from the average of 309,000 square metres a year over the previous four years.

All of this new space is likely to be completed at a time when many businesses are looking to downsize or reduce their costs, which will help to put downward pressure on rents, which in turn would reduce capital values.

On top of that, consents were issued for $1.14 billion of structural alteration work to commercial buildings such as offices, shops, hotels and industrial buildings in the 12 months to March this year, which will result in much of the existing space being substantially upgraded.

That means landlords who have not kept their premises up to scratch are likely to be particularly vulnerable to extended periods of vacancy and declines in rents if they lose a tenant, as tenants seek out the best bang for their rental bucks.

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All up, it looks like this property cycle has come to a close. Incl the economics of investors using Airbnb because hotels will have to meet the market with their room rates and will be competing for the few tourists out there. However, countering that to a certain extent is that this govt is using hotels to accommodate the homeless beneficiaries. Which for me introduces a trepidation to the idea of booking a hotel room.

Possible scenario: lower end motels help bridge the social housing gap in the medium term; hotels (and those airbnb operators willing to operate under commercial terms) be used for accomodating tourists and those previously renting airbnb; and general air bnb gets used as longer term rental or exit the market (or leave them empty until they can once again play a role in squeezing the rental market).

This seems like a good solution that will spread things the most evenly.
But because this seems like the most sensible choice (out of the very limited options available over the coming year or two) I have a feeling it won't happen.

What concerns me is the amount government are paying for this temporary accommodation privilege.

With the surplus supply of accommodation, isn't it time to create a true market rate; rather than subsiding providers who have been milking the tourist market for the past 20 years at the expense of joe public amenity and the poor wages they offer. Lets have a competitive tender process, which could have the flow on effect of reducing residential rentals all round.

This could provide a great opportunity for the government to drip feed itself off the accommodation supplement, instead of facilitating additional loans to residential investors; largely for the benefit of these overseas banksters and the export of their insane profits. Last count $5 billion per annum. How could that be when NZ inc largest corporate can only make a profit of $500 million on a good year? Aid and abated by ex politicians is the answer. Time to put them on the witness stand to answer some hard questions, rather than the corrupted media controlling the dialogue.

Except hopefully the taxpayer will be in a better position to negotiate. None of this $1500 - $2000 per week for a family of 5 to camp out in a 2 star motel.

Def not. Bali has set the going rate. 4/5 star hotels for $240 for a month.


Orr won't let the cycle be done. He'll conjure demand with his magic wand, pulling forward even more demand from the future, Japan style.


Indeed. One should not underestimate the degeneracy of the central bankers.


Or the powers of the feudal overlords.
Now I had heard a rumour recently that one of the anonymous commentators that posts/spruiks on here was actually a well known owner of a real estate company. It made me wonder how many other notable characters from the ‘RE and Usury’ industries are masquerading here behind their false name whilst posting comments that their governing
body may find questionable?

I've never observed anybody telling you to invest in property in these forums? Maybe you're just bitter and envious of them?


Ah the old ‘envy’ card! The favourite Comment of the spruikers keen to prop up the wobbly foundations on their leveraged house of cards!

So you're saying the word "envy" props up houses. Makes no sense at all.

Nor does heavy leverage on a motel in the Hawkes Bay!

You're making less and less sense

No one is spruiking anything to you though?? I’m not in real estate either, it’s actually quite odd, maybe you should a see someone?

Interesting. The "Buy a house, the Banks might go bust!" Brigade.

Ignore the gaslighting. I've seen plenty of that here in just a short time.


Plus that is why you pay such High double down on your stay in LA-LA land........cos the homeless, cannot afford a bed of their own....Making. ...and we priced them off the Bleedin Market. Ironic eh!.????


Commercial properties will be more badly effected than residential properties.

Residential properties may or may not have crash (Crash is termed as fall of 20% or below) and may get away with fall (below 20%) but in commercial properties it seems that crash is inevitable which may have a domino effect resulting in pulling even housing price further.


There is a possibility here at play that the commercial property market may not fully recover for a long time due to some structural changes leading to a chronic oversupply.
Recently, NBR decided to vacate its AKL office spaces in favour of an indefinite remote working setup. This move should save them $311k a year in office lease expenses, leaving them enough financial headroom to maintain their current staff numbers without pay cuts and a further $200 a month in WFH expenses to each employee.
I guess several other companies could be planning the same move.

"I guess several other companies could be planning the same move."

Wonder if the business managers are considering this move for ...

Richard1965 - Clearly Commercial is going to feel the winds of change just as happened in the 80's but that's nothing but scaremongering about Residential. There will be a dip but a crash is ridiculous. Commercial tenants numbers are contracting that's the source of the downturn the number of residental tenants stays the same or probably is increasing with returning Kiwi's. It's a dip not a crash that's why I buy and expand my portfolio in these cycles the world is not stopping it's changing.


Well, if you're going to be working from home you will want wherever you're spending 20+ hours of the day to be nice.

If being able to hold down a corporate role from Bay of Islands, Coromandel or Queenstown is the new normal, maybe there's a demographic shift out of cities?

I agree. Could also apply for potential First Home Buyers that have struggled to buy in places like Auckland. The ones who find themselves able to work from home full time may start looking to regions with more affordable housing.

This may sound over-optimistic but if the government's push towards greater self-sufficiency and sustainability is even partially successful over the medium term, there could be more well-paying jobs created in our regions for a change.

This is the perfect opportunity for New Zealand to position itself as an agile and resilient tech hub in the Pacific. We could have people working remotely all over the country for larger tech companies and startups. They should introduce a visa type for digital nomads who want to work and live in New Zealand but might be over the age for a working holiday visa. Another idea I had was that if we could ever get a position where we can build houses cheaply and quickly leading to an oversupply, we should subsidise them for top talent and companies who are looking at setting up business in New Zealand. We need to play this to our strengths and I think an honest and open conversation about how we will all need to work together to pay off the debt would be useful. I think that should be discussed before the election.

We could have people working remotely all over the country for larger tech companies and startups.

Why? The real hubs for this are in countries such as Vietnam. Why NZ? Is our talent that much better?

I am bit of a dreamer, but I can see the opportunities for NZ and with the right incentives we can lure the right people and companies. We are the perfect testing ground for new technology and kiwis are generally pretty tech savvy. We took to eftpos and showed the way. Self driving cars, drone taxis, plant based meats, 100% renewable energy... clean green, high tech, sustainable among other things. These things should be the principles of a new economy.

Potentially the big factor to provide the country a competitive advantage for tech in the future will be the quality of education provided to children and teens (just like we have a set of schools that has been a massive factor in making NZ rugby so strong on the world stage). That's one thing we do have better for more children than do developing countries. However, we seem to have under-resourced it for a while too.

Potentially the big factor to provide the country a competitive advantage for tech in the future will be the quality of education provided to children and teens (just like we have a set of schools that has been a massive factor in making NZ rugby so strong on the world stage). That's one thing we do have better for more children than do developing countries. However, we seem to have under-resourced it for a while too.

Vietnamese students perform far better than NZ students on maths and science. Doesn't it make sense that they have a comeptitive advantage in fields of commerce related to tech? And how about some actual examples. NZ's Augen Software is based in Vietnam. In many ways, it's outsourcing the labour to Vietnam.

Yes you are right on being over-optimistic, and the opportunity that presents itself.

The Govt. has had over a decade to sort out or unaffordable housing and poor build quality that would have achieved many of the same goals, but they chose not to.

Unfortunately, under stress, most systems revert even tighter to form, and end of doubling down on the wrong stuff. They think by doing what they were doing quicker, and more of, then that is the solution. In never crosses their mind what they were doing was the wrong thing to being with and that doing it quicker and more of will only make it worse.


Lot of noise is being made by those for whom working from home suits but there are also plenty who dislike it and are missing the collegiality of working with others. The ranks of senior management include more than a few narcissistic control freaks; these poor sods will be experiencing extreme anxiety at not having employees physically present to adoringly validate their wondrousness. And these are the ones who get to make the calls on remote working.

Wow, you seem to have a big issue with authority

SSHHHH, now the Coromandel council will use a rateable value 10% higher than last year to pay for their bungling rubbish collection contract :(

"being able to hold down a corporate role from Bay of Islands, Coromandel or Queenstown"

Absolute pipe dream.

I work in the exec team of an NZX50 company.
The only people we've **really** needed to be in a war-room situation have been our exec team.
Working in a bubble, in our HQ.

Anyone who thinks it's possible to effectively run an exec team remotely has never worked in a "corporate" role.

And these are the people you expect to support luxury housing markets in the regions?
I can't wait for reality to bite you.


I am long retired so cannot comment personally, but I have a daughter-in-law who works in a senior position in our biggest company and will continue to work from home 'for the foreseeable future'. My son is GM of a small but nationwide company and will certainly spend much less time travelling the country, now that they have been forced to operate remotely and found that it is very doable.

Well good luck to them if they're able to
- negotiate new Bank funding;
- organise capital raises;
- re-cut budgets (after budget, after budget, after budget); and
- centrally manage all the requirements of everyone else working remotely (IT, operations, suppliers, customers)
Whilst in isolation from the rest of their business then they're doing something that I can't do.

But then again, our "biggest company" hasn't exactly been a paragon of performance in recent years, so perhaps it makes sense.


Sounds like you're a CFO. So financially savvy ...

Amazing insight Mr Church.

Shoreman, I too am of the view for now that house price may fall but not crash. At the same time in this fluid situation which is getting from bad to worse nothing can be ruled out.

Anyone if not hit by job or business loss, based on their wisdom is entitle to invest be it any asset class.

If cash rich than one may invest in housing market (though stock market may give better return and flexibility for now) but buying right now and may see the deposit/equtity wiped out or buy after few months and get more value for your money/ deposit. Individual choice.

"the number of residential tenants stays the same or probably is increasing "
If our family is any judge, the number of tenants is going to fall!
Mind you, the density of occupation is going to rise in our house as the adult children return home.

Be, you will not be allowed to increase the number of residents in your rental unless your landlord approves this.
If he does then no doubt he would be putting the rent up significantly!


"... you will not be allowed to increase the number of residents in your rental unless your landlord approves this. If he does then no doubt he would be putting the rent up significantly!"

1) So landlords are going to charge their long term tenant rents based on a per resident basis now?

2) does the rent decline if the number of residents decline? (I.e some of the former tenants move out such as the adult children & their partner / spouse, children, whilst original parents remain in the dwelling)

3) what happens to market rental prices if there are large numbers of comparable residential dwellings nearby owned by other landlords that are being offered by those landlords at significantly lower rents (as they are vacant)?

You never listen to RE agents like the Boy as they sensationalise on a regular basis. I checked my KiwiSaver account balance today. It is virtually back to where it was pre Covid 19. I can recall the Boy saying property is safer than equities. It will be interesting to see where property values go to in the future and how long they take to recover their losses. Equities as always bounce back hard. Property will be challenged to equal such a remarkable recovery.

Gordon, I am pleased that your KiwiSaver account has bounced back.
I don’t want anyone in NZ to not be as financial as they were.
Property is safer than equities any given day, and let’s just wait and see if property prices do drop in ChCh, not that it will worry us as we don’t tend to sell.
If they do drop then yes, we will be looking !

"to not be as financial".

That's all I need to know about your literacy.

Reminds me of the comment yesterday of Printer8 telling people that all property investors are astute! But then I talk to them in person and read their comments and realise many have no idea at all about much other than drawing a straight line on a chart representing NZ property prices from 1990 - now.

CN, a rental agreement is completed with the tenancy agreement denoting the no. Of tenants and the names of the tenants in occupancy.
Any additional tenants need to be agreed with the landlord or property manager.
Just because you are paying rent on the property does not give the tenants the right to just bring anyone in to the property or replace them without the landlords permission.
What landlord wants to find out that someone who is not a terribly desireable tenant has moved in and it can also change the dynamics of the rental.
You can not just bring in a partner to live in the property as of right without the landlords permission.
If there are additional tenants moved in then that alters the tenancy and if permission is given then the alteration has to be recorded and often a new tenancy agreement entered into and this can include an increase due to the extra wear and tear on the property

1. No it is not done on per resident basis. Property is rented at what a property is worth for rent. If is is a 4 bedroom home and only 3 bedrooms are being used then normally it will be rented at the 4 bedroom rate.
2. Generally no the rent would not decrease especially if it is a fixed term. If someone moves out then the full rent is still due and not reduced.
If the tenants want to get someone else in to replace the person who has left, then the new person has to be checked out and approved.
3. At the end of the fixed tenancy the tenants are obviously able to move out and go into a cheaper rental, that is not a problem but they can not during the fixed period!

The Man 2, I've asked this question many times before but never got a sensible answer from you.
"you will not be allowed to increase the number of residents in your rental unless your landlord approves this". How do you know they have more than the number of residents allowed? you can't exactly turn up impromptu to check on them, but they can do some of the followings:
1. ask the extra people to pack their stuffs away at insection.
2. Say they are (short-term) visitors.
3. If the Landlord snooped on them, lay a complaint to Tenancy Tribunal
4. Say "what extra people?" to the landlord

This is a very common problem faced by property managers..


"the number of residental tenants stays the same or probably is increasing with returning Kiwi's"

I have heard that line from at least 2 RE agents. Where are these high paying jobs that these returning kiwis need to sustain a million dollar mortgage ?

Its a dip not a crash .... revisit that in 4 months, likely that the rubber will hit the road at the end of the 12 month wage subsidy

I have also heard this rhetoric a lot.
It seems lacking. For every returning kiwi there is surely just as many leaving for their own home country.
I'd love to know the stats on this. I wouldn't be surprised if for every ex-pat we lost 3 or 4 foreign workers.
Add in your other point about the lack of jobs for these individuals.
I fail to see how this could protect the housing market.

Yeah it doesn't make sense. We have a whole lot of foreign workers leaving presumably due to lack of work, yet somehow ex-pats will just turn up out of the blue to jobs? I'm guessing a lot of the expats that do arrive will have lost jobs overseas and have decided being jobless at mums place is better than being jobless away from home.

Yeah, totally.

We're just going to rely [read: hope to hell, really hope to hell] that all these [non-existent] tens-of-thousands of highly skilled cashed up Kiwis are going to throw in their secure, well-paying jobs and established networks overseas to come home and drop money into one of the world's most over-valued markets. In the middle of the worst economic crisis in living memory.

That's some real bullet-proof logic.


Jesus, you are just delusional.
- International students (35k) ... gone
- Net migration of (50k) ... gone
- 200k workers in short term work visas ... tbc
- International tourism ... gone .... short term air bnb's will be converted to rentals.

And that is all before we factor in local unemployment (with people moving in with family or friends when they can't pay the mortgage/rent).

How you think returning kiwi's will offset all of the above and somehow increase the demand for rentals is beyond belief.

Perfectly said.
I knew the figures going out would be much higher than coming in.

GR seems excited to restart our education commodity business by bringing in more international students than before and this time has another marketing stint - provide a safe haven from Covid-19!
And here some of us were expecting positive changes from our political overlords. Both sides would rather take us back to the good old days of record migration ASAP in the name of recovery!

International education brings income, do you have a better idea than just a repertoire of hyperbole

Let's be clear here: the education part of the deal doesn't bring in the dollars, it's the working rights during studies and upon completion of the course that attract students to NZ.
Tighten some of those rules around work visas and residency points after course completion and the international student numbers should fall to a-tenth of the record highs or lower.
FYI to further this "export education" scandal, our immigration system favours low-skilled workers with NZ qualifications over high-skilled migrants without one.

Totally, it's a residency sham - dressing up the lowest-possible-rent courses as an "Education Industry".

Property spruikers will grasp at whatever straws they can til the bitter end.

And in the current environment. If those kiwis have a job overseas (and keep it) they won’t be moving anyway. The ones that return will be those looking to move in with mum and dad.


I cant see how residential property in NZ is somehow immune to a collapsing world economy. It just isnt that special, and neither is NZ.


You must not have a pair of rose-tinted spectacles Sluggy, apparently they get handed out when you buy your first investment property on tick.

They may simply be expecting more central government / bank to inflate and prop up property, as they've become accustomed to. The older generations in positions of power will surely circle the wagons and work hard to avoid affordable housing, right?

Can imagine the discussion: ‘whatever happens we can’t allow those little shit millennials to have an affordable house to raise families. We worked far to hard dropping interest rates and inflating this bubble the last 30 years to give it all away now!’

Looks perfect for one of those Hitler parody YouTube clips.

When there is excess or old commercial property it is often converted to apartments. However that probably won't happen on a large scale for some time as there is going to be a lot of competition for residential rents. There are a lot of investors waiting to see what their position is because no one knows how many tenants will still be there after lockdown.

for some time as there is going to be a lot of competition for residential rents.

Based on your gut again dictator. What's the reference


Watch the swathes of millennial tenants losing low paid jobs in the service sector leave rentals to return to mum and dad ‘boomer’. Each kid being another boomers bread and butter!


Or eventually leaving the country, when they can get out

The ones I talk to have no intention of waving goodbye to aotearoa.

Just to be clear, I'm talking about people on work visas.
They may not have a choice.

Me too Fritz. Seems they have been automatically granted one year transitional visas, I think that's the correct label.

Common sense and a basic grasp of supply and demand.

Unbiased research then lolz. You may as well throw a coin, heads rents heavily fall, tails rents fall heavily. Snap you win

You sound awfully defensive.

Taking this new reality pretty hard, aren't you?

Poor you.
[Cue world's smallest violin]


This happen a lot in the UK where commercial properties often besides river and canals were converted in apartments. Can’t say I’ve seen many properties that could apply here. The Saachi and Saachi building on The Strand in Parnell is the only one I can immediately think of but there are probably a few in the CBD. I think the associated high price tag would probably limit the relative success of such conversions.

Apartments could be the big loser in resi. Common area's and lifts are way too high risk for me with strangers and air bnb guests coming and going.


Lockdown relaxation warning
South Korea now chasing 70,000 new possible contacts arising from a single person visiting a number of nightclubs in a single evening after they relaxed the lockdown rules.
A timely alert for NZ government from a country that thought it had beaten the Virus


This is proof that the virus can't be contained. We're arrogant to think otherwise.

Given we can't lockdown indefinitely without society as a whole collapsing, the only course of action is to go straight back to business as usual.

Same thing could happen to NZ. lift a lock-down, a single person can spread Covid like crazy.
Then we have to go back to Level 4 to eliminate, only that govt would not have money to throw this time.
I think we have to accept we need to live with the Covid to some extent, at least for a while.
Business as usual, but social distancing and wearing masks at public, trying to stabilize the number of new cases rather than wishing to see zero.


Living with and paying for covid is easy. Living with and paying for the debts and excesses and general direction of the last 20 years is going to be the hard part. Poor covid is just a whipping boy.

There will be no going back to L4. The economic contraction of our efforts so far is estimated by the IMF at around 7%. Another period of enforced idleness would take that into double figures with catastrophic social consequences. The justification for 'going hard' was that we didn't really understand the pros and cons and elimination was worth a shot. We now do. Well, much better anyway. If/when another wave is let loose the dies is cast on herd immunity with protection for the most vulnerable bingo the only option.

Reading between the lines from the government and the ads you see on TV, it looks like the appraoch will be that we've sacrifice to much to not continue with our eliminate strategy.

It wouldn't surprise me at all to see the country back in L4 in 4 weeks times based on what I saw on the news last night. People out and about everywhere. It will only take a spark then there's fire....and back we go to L4. What would the point of the last 5-6 weeks been if we then say, oh well f#@k it, let the virus spread?

The almost complete confusion over what should and should not be open was school kid level. The Propaganda Minister letting out that the govt should be dismissive to the medias enquiries shows their utter contempt for the public.

And talking of school kid level, following hard on the heels of Hipkins shambolic L3 school attendance strategy he is now, astonishingly, proposing we consider reopening the doors to international students. The demographic most likely to flout the rules, superspreaders personified.

IO. You are talking about mass destruction of the country's economy. Political suicide. The people are already thumbing their noses at the rules.

Ok let COVID do it’s thing - everything will be sweet and the economy will be fine (significant sarcasm)

Yeah basically this. You just have to not have crowds. Much of the spread of the virus comes from these large clusters. It's not like this:

Person A: Infects 3 people
Person B: 2
Person C: 1
Person D: 2
Person E: 3
Average = 2.2

It's more like this

Person A: Infects 1 person
Person B: 1
Person C: 0
Person D: 1
Person E: 8
Average = 2.2

But if Person E doesn't have the opportunity to walk into a crowded bar, they only infect 1 and the average becomes 0.75. This is why there hasn't been much difference between the NZ and Aus trajectories thus far, because beyond a certain 'optimal' level of lockdown there are only very incremental benefits to applying more restrictions.

Yeap. happened in Korea when the Korean govt. thought it was over after seeing few cases for number of days
A young guy with symptoms visited nights clubs and escorts, infecting almost 100 men.
Low number of new cases today does not guarantee a success of lower number tomorrow.

Reminder, that it only takes one to spread the virus.

Remember that one super spreader in South Korea? -

Thought this was worth sharing.
Virologist who caught COVID-19 shares their perspective.

Especially when the usual crowd of right-wing Fox news consuming ranters are declaring they will never download a tracing app and allow themselves to be tracked. I'm not sure why they were not so concerned when John Key was saying "if you've got nothing to hide you've got nothing to fear" when justifying increasing surveillance of Kiwis in the past.

Yes, agree. The foxers ranting obscenities with their assault rifles in the US have never been educated to have empathy for other people. It is simply about their 'inalienable' right to make their own decisions as to wear a mask etc etc. One person wearing a mask will have less of a chance hurting the person not wearing the mask, but the person not wearing the mask DOES have the potential of hurting others.
Like trump himself, they simply do not have the education to be able to decipher the difference. You gotta feel sorry for them and the education system in America.
They just don't understand that it is not about their rights, it is about their ability to think as to what THEIR actions will have on others. Quoting JFK..'Think what can you do for your country, Not what your country can do for you" resonates loud and clear here. But if you have 48% of the population voting for trump in the last election that pretty much tells you the level of IQ.
They have the right, just not the ability. (Ron White quote?)

Yes, have to watch out for reckless behavior.
The whole workplace, an IT company with employee over 1500 had to close down.
Tracing the men he had contacted had become very difficult as some men are reluctant to come forward.
The night time activities are the most dangerous when young people desperately looking for sex partners.
And, when they do it is quite often anonymous, many used false name and registered wrong mobile number, made almost impossible to trace.
NZ should keep restrictions on bars, night clubs, and escorts or any night time activities for that matter.
It only takes one person.


Consented does not equal built. Many projects will just get stopped either before construction or half way through. Only a few will get completed, and only if they actually have the cash to do so.

Yes good point Roger. This is only consents: much of this space won't be built. Same as apartment market (Chch at least). There's still a very real and profitable place for the existing stock of good commercial property: certainly industrial, but also office (as remote working will be found generally to lead to lower productivity) and for retail (online sales are about at saturation over level 3, but they're minuscule). And I still want to go to physical stores for most things, certainly the big purchases, and that will continue to be the case. The current talk about paradigm change is overblown: although commercial property is in peril unless we can get at least to level 2. Level 3 and 4 are the death of it (and economy).

The one sector that won't come back until we get a vaccine - which isn't guaranteed - or finally have to buckle to herd immunity, will be accommodation: especially at upper end.

'or finally have to buckle to herd immunity' - Our elimination strategy is hanging by a thread as regular plane loads of the repatriated arrive here from places like India where the real penetration of C19 is unknown. We are entirely dependent on these travellers complying with quarantine. How likely is that?. Rest home workers here, often foreign nationals, have been the source of recent breaches/new cases despite being in closely controlled environments and trained in PPE use. NZ will be on a knife edge for a very long time, up to a decade according to a recent prediction by a Swedish expert.

There's been mandatory supervised quarantine for returning travelers since April 9, and the numbers have reduced to a trickle.

A 'trickle' is all that's needed to unleash a blitz on us. As has happened in Korea with said trickle; and that's in a country with the worlds most sophisticated tracking system. Our manual system would be quickly overwhelmed. Here in NZ the category of 'associated with overseas travel' keeps popping up as the source. More today. Meanwhile Pakistan has abandoned containment in the face of the same challenge India will also need to confront ie lockdown and starve to death or accept the C19 wave. Meanwhile hundreds of sequestered travellers meekly remain confined to their NZ quarantine hotels (or not) and the staff serving them will do a getter job of isolation than trained medical professionals in rest homes did. Right, that's all good then.


Construction is definitely in for a handbrake turn. Let's stop all the newly trained tradies going to Aussie never to return like the GFC. State house building program and get infrastructure underway, road, rail, schools, hospitals. I'd rather see tax funding go into something my kids will be able to use than propping up speculative bank profit.

As more state housing comes in line, roll back the accomidation supplement, thus using one to fund the other. This will also unwind the position of debt strangulation that the banks and specuvestors have tricked NZ into adopting.

Nice one, AM.
A well-planned approach should help absorb some of that overcapacity. For one, accommodation will remain in short-supply in Wellington for a while as our public sector tries to pick up some of the slack in NZ's job market. WCC has been particularly poor in its consenting process since the 2016 earthquake, so supporting building activity in the region should keep construction jobs intact.
Also, better connectivity of outer Auckland suburbs to the inner city through targeted transport infrastructure will not only keep construction workers employed but also ease some of the downswings in the housing market of these far-flung areas.

I volunteered to sort parcels at our depots during past two days, the amount was enormous. This pandemic has already made online shopping more mainstream. Owners of some commercial properties need to adapt quickly.

Just a thought here, apartments might also suffer badly. We have the lack of students and overseas temporary workers (who are quite used to apartments). Meanwhile, professionals having to work in a small room for the last 6 weeks (possibly with another person in the room) will be going stir crazy right now. This comes at the time when multiple large apartments were nearing completion, but may now likely stall.

Its always surprised me seeing the number of town houses/apartments that appear to be empty on the North Shore of Auckland. If you drive around Albany or even across to Hobsonville, there appear to be hundreds (if not thousands..) of empty buildings there. Be interesting to see if they get filled as some point...but I just wonder where from at the moment if we have no new arrivals?

Big daddy has been a little quiet lately on the great opportunities for commercial tenancies, where has he gone?

We should abandon the lockdown and all restrictions and let everyone out.
We are effectively at war, a war with a fiendish enemy who takes no prisoners.
But like any war there will be casualties and that regrettably that is the price we have to pay.
Every General knows that when he sends his troops over the top some will never get back.
That is a tragedy but that is the price we must pay for freedom.


My Mum is not dying for your property portfolio Olly, [ ].

Neither is ours. But we don't expect the whole nation to destroy its livelihood to facilitate her survival. She's our responsibility, not the states.

Would you expect ICU treatment from the public sector if you got sick?

Yes you probably would.

Could you have it if we all go back to work to save the economy and we have a COVID surge? Probably not. As long as you’re happy to sacrifice your access to an ICU for me, then I’ll come out of Level 3 to help get your business going?

"But like any war there will be casualties and that regrettably that is the price we have to pay." You do get that you are saying we just fly the white flag without so much as firing a shot, not put up a fight, as we are right now?
I expect you see yourself as one of the generals as they tend not to be in the firing line.

Funny thing was if we let the vulnerable people die for the sake of the economy, we may be at risk of encouraging civil war, as inevitably it's the poor who suffer most as they already have statistically higher health vulnerabilities. Add to that our attempts to protect the wealth of the already wealthy and yeah, we might really start pissing off the majority of the population.
Watch the USA closely, they started on this path although admittedly tried to pull back a bit. Civil unrest is real and no joke BigDaddy, I have family in Croatia. You comparing lock down to being at war is actually repulsive. Check yourself.

Vulnerable people die with either lockdown or a herd immunity strategy. Lockdown has a reasonable chance of delivering fewer but that is just best guess. BigDaddy may be right ...... or not. I disagree with him by believing lockdown is worth a shot for a month given we will get only one chance. His war analogy is a tad hyperbolic but not inappropriate. We are under attack by a malignant enemy. The government suspension of civil liberties and mobilising of the country's wealth has parallels with military conflict.

Agree to disagree. Being at war is absolutely and totally nothing like lockdown. People need to get a grip.

Wrong, they actually come out better off because their life expectancy is lower anyway and/or they have a younger tilted demographic.

Eg how many 80+ year old Maori and Polynesians are there compared to European or Asian?

Like History will tell you...The Generals never went over the top and out front leading the Charge...They sent the poor private class to do the dirty work and they got the Medals and the rewards in History.

Thousands died.......but not many Generals were hit in the pocket or elsewhere.

In fact if the Privates deigned not to follow their lead from the rear...they were shot for insubordination....Go Figure.....Debt before dishonor.

A life's work....for what...A mugs Game.

BD,To clarify the war reference, are you claiming , as some are already, the virus and its deliberate spread is a premeditated act of war?

Perhaps the sacrifice of your generation BigD, given were at war, could be the price of your property portfolio. Don’t need to worry about getting shot or gassed, but just stay at home for the good of society and lose some value of your vast property empire! Think of the things sacrificed by the generations before you so you could build that property portfolio.

People who believe that letting the virus spread will allow economic recovery have been mislead. Allowing the virus to spread will further destroy our economy, as hysteria flows through with the virus. Overwhelmed hospitals + Death = Scared and unproductive people.

Turn some of it into decent apartments?

The real issue isn't so much the oversupply of commercial property but the poorly run businesses that inhabit them. One things for sure, in NZ the term 'Business management' usually translate to 'business mismanagement' give it a few months you will see what I mean.

The point has been made already but worth repeating.
Consents are not buildings. I have no doubt that at least half if not more of the consents issued will not be acted upon. This will help keep the commercial market tight. Unfortunately the downside will be a lot of vacant land.
After the ‘87 crash the amount of empty land was staggering, as it was during the GFC. This could stabilise the cost of land or even depress it. Only commercial properties in prime areas will be the safest. Outside those, or in smaller towns it could be a disaster.

Yeah Nah, the rents around Wynyard Quarter are no longer viable.... this time the pain will not just be new builds but may well be the most vibrant places...

Holes in the ground have become a focal point of past excess, I remember the BNZ building, Countdown Ponsonby, that one on quay street has to be next (leaking foundations Chinese builder.....).

That Singapore $$ hotel next to ASB that looks like it sits in sea water is going to be a financial disaster for the "current" owner.

Personally i think Covid is like subprime.... in itself it is not that bad, but it causes us all to realise the debt levels are unsustainable.... much like a $5.75 diary farm gate payout.

I think Kiwi Properties write down was a starter for 10....

Just the entre, now for the main course.... and I thought that restaurants were closed.

The reports of the death of commercial property have been greatly exaggerated.

All that space and all those homeless.....

Excess supply and drop in demand.
Applies to residential also
So prices will do what Yvil?
But not much, until July.
Then the real drop comes

Unexpected recession? Dah.