The expected downturn in the building industry is likely to extend beyond residential construction, with the entire building industry likely to be affected.
Last week interest.co.nz reported that the number of building consents issued for new dwellings in the first quarter of this year was down 21% compared to a year earlier, suggesting a significant downturn in residential building activity.
However the figures for non-residential building work are even worse.
According to Statistics NZ, just 876 building consents for new, non-residential buildings were issued in the first quarter of this year, down 28.7% compared to the first quarter of last year.
That was the first time the number of non-residential consents issued was below 1000 in any quarter of the year since 1992.
The total floor area of new, non-residential buildings consented in the first quarter of this year was 610,176 square metres, down 24.6% compared to the first quarter of last year.
That was the lowest amount of new non-commercial floor space consented in any quarter of the year since 2016 and the fourth consecutive quarter that new floor space consented has been below what it was in the same quarter of the previous year.
Those figures all point to a serious downturn in planned non-residential construction activity once existing projects are completed.
However this may take longer to show up in economic indicators because non-commercial buildings, which include everything from schools and hospitals to offices, shops and warehouses, generally take longer to complete on average than residential buildings.
On the commercial property front the the biggest declines have been in consents for new warehouses and factories.
The amount of new warehouse and other storage building space consented in the first quarter of this year was at a two year low and was down 38% compared to the first quarter of last year.
New factories and other industrial buildings have taken an even steeper tumble, with the amount of new space consented in the first quarter of this year down 57% compared to a the same quarter of last year.
That meant the amount of new factory/industrial space consented in the first quarter (Q1) 2023 was the lowest it has been in any quarter of the year, except Covid-lockdown affected Q2 2020, since Q1 2017.
The slowdown in consents for new warehouses and factories is especially significant because they have been the two most buoyant sectors in the commercial development space, suggesting the strong growth in demand evident over the last few years may be past its peak.
Coming on top of an expected slowdown in residential construction, the figures suggest a significant slowdown is on the way for the entire building industry.
An analysis of building consents which gives average size and average value per square metre for new office, warehouse, retail and factory buildings in each of the main urban areas, is available on our Commercial Building Consent Analysis page.
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