Far fewer commercial buildings are likely to be built over the next few years with the number of office buildings consented slumping to a 32-year low in the third quarter (Q3) this year, while the number of factories and industrial buildings being consented is at a record low.
However, the estimated build costs for new commercial buildings remain high and the average floor areas for many of them are getting bigger.
These are just some of highlights from interest.co.nz's latest Q3 update of our commercial building consent analysis tables. They break down consents for the main types of commercial building by average size, build costs and cost per square metre, both at the national and regional level.
A brief summary for each of the main commercial building types is below, or you can go straight to the tables themselves here.
New Office Consents:
The number of new office buildings consented in the September quarter (Q3) of this year, slumped to its lowest level in 32 years.
According to Statistics NZ, just 38 consents were issued throughout the country for new office buildings in Q3 this year, down from 61 in Q2 and 54 in Q3 last year.
That was the lowest number of consents issued for new office buildings in any quarter of the year since Q2 1992.
However, while the total number of new office projects consented was low, the consented projects were not small and neither were they cheap.
The average size of the buildings consented was 2200 square metres, which was only the second time in the last 24 years the average size of office buildings consented in any quarter of the year has been above 2000 square metres.
That meant the 38 buildings consented would bring a respectable total of 83,583 square metres of new space to the market.
Because of their larger size, the new buildings will not be cheap to build.
Their average estimated build cost was just under $7.5 million each, which is a new record for average office build costs in this country.
However the large size of the new projects appears to have produced economies of scale, with them having a relatively modest estimated average build cost of $3404 per square metre.
The analysis tables for consents issued for new office buildings, nationally and in the main urban regions of Auckland, Waikato, Bay of Plenty, Wellington, Canterbury and Otago, are available here.
New retail premise consents
There was a jump in the number of new retail premises consented in the September quarter of this year, with 57 consents issued for new retail buildings throughout the country in Q3, the highest number since Q2 2022.
That would provide 41,802 square metres of new retail space to the country's retail stock, and provide an estimated $155.2 million of new building work.
The average size of the new retail buildings consented was 733 square metres at an average estimated build cost of $3714 per square metre.
The analysis tables for consents issued for new retail buildings, nationally and in the main urban regions of Auckland, Waikato, Bay of Plenty, Wellington, Canterbury and Otago, are available here.
New warehouse/storage consents
The number of new warehouse/storage buildings being consented continues to decline and they are also getting smaller.
Just 95 new warehouse/storage buildings were consented in the September quarter, down from 109 in Q3 last year, continuing the slow decline in warehouse/storage consents that has been evident since the beginning of last year.
There is also a trend for the new warehouse/storage buildings to be getting smaller, with those consented in Q3 this year having an average size of 1396 square metres, which was an almost five year low.
However build costs headed in the opposite direction, with the average estimated build cost hitting a record high of $2265 per square metre in Q3, up 73% compared to Q3 last year.
The analysis tables for consents issued for new warehouse/storage buildings, nationally and in the main urban regions of Auckland, Waikato, Bay of Plenty, Wellington, Canterbury and Otago, are available here.
New factory & industrial building consents
The number of new factories and industrial buildings being consented fell to a record low of just 72 in the September quarter of this year.
That was down by 14% compared to Q3 last year and down 52% compared to Q3 2022.
However, while the number of factories and industrial buildings being consented hit rock bottom in Q3, their estimated average build cost hit a record high of $3.68 million, while their average size of 1399 square metres almost reached the record high of 1414 square metres set in Q1 this year.
Altogether, 100,695 square metres of new factory/industrial space was consented in Q3 at an estimated total build cost of almost $265 million.
The analysis tables for consents issued for new factory and industrial buildings, nationally and in the main urban regions of Auckland, Waikato, Bay of Plenty, Wellington, Canterbury and Otago, are available here.
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14 Comments
The economy is going to be in slumber for the next 4 years..
Good info. With the size and cost of the projects jumping, it'd be interesting to know what the actual $ value slump is.
Nothing wrong with that. Too many office buildings now and probably a fair amount of space untenanted. A few construction companies gone to the wall is part of the boom bust cycle. Next boom there'll be a number of wannabees starting up again. The pool of workers that become available can now switch to other types of construction
Or more likely leave for Australia or retire early. Thus not being available for the next boom, leaving us with a still larger labor shortage
It's time for the government to pivot and get back to some deficit spending. The longer they hold off, the bigger task to resurrect the economy and more specifically the construction industry.
Maybe we could start on building a wooden ferry...non rail enabled of course?
Make it a sailing ship to take advantage of the winds through Cook Strait! /sarc
Add some long oarsman..so no need to for tugs to dock....perhaps some fresh boot camp graduates?
It's time for the government to pivot and get back to some deficit spending. The longer they hold off, the bigger task to resurrect the economy and more specifically the construction industry.
Even if they decided to deficit spend yesterday, it's years before that translates to actual activity.
Not so.
Boosting benefits would do it almost immediately. As would increasing the salaries of teachers. I could go on and on.
(The benefits of 'helicopter dropped money' are not really understood because it happens so infrequently as the upper-middle classes and above cry foul because they don't usually get the share they believe they are entitled too.)
Solutions like boosting benefits are great for ramping up day to day consumption and consumer inflation (including rents) but probably won't move the needle on infrastructure and construction spending. At least not without a massive lag.
You can look at the Fed all you like and say rates are going to be higher, but things are dead here. Really dead.
This big builds are the ones that sucked up a lot of immigrant labour with manual work. And that work now is largely gone.
The lack of apartment building being built is the real killer. The cost a lot more and employ a lot more labour because of the finishing.
Lux the quackery duck is fiddling & flitting around while Rome burns
Good thing they left the OCR high for those few extra months
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