Industry Players Predicting Strong Growth – Just Not As Concentrated as they would like to believe
Industry players are pointing out that indeed Auckland is in for strong growth over the next thirty-odd years. Although significant amounts of that growth concentrating itself into the CBD I do not see happening as they predict.
From the NZ Herald:
By Anne Gibson
Business growth forecasts are so strong that Auckland is facing a big building shortage and needs 18 more PwC Towers, 18 more Metropolis blocks and 18 new malls like Downtown at the foot of Queen St, says a property expert.
Alan McMahon, Colliers International’s national director of research and consulting, said that by 2031 when an extra 500,000 people were forecast to live here, 54 new buildings the same size as PwC, Metropolis and Downtown would be needed.
“New floor space equivalent to one each of the three buildings will need to be constructed every year for the next 18 years if the CBD is to accommodate forecast demand,” McMahon said
You can see the rest of the article over at the Herald site where Mr McMahon using statistics outlines the reason behind his call that I have quoted above.
While Auckland is due to grow and grow significantly at that I believe Mr McMahon might be slightly cherry picking stats from Council and Statistics NZ data.
This piece from one of my earlier posts outlines a possible reason why:
Strong Historic Growth and Continuing
Transport Blog had blogged earlier in the day strong growth in the Auckland Isthmus and CBD. You can see the post here: “Strong employment growth in the central city.”
Here are two of the tables pointing the growth or decline in the areas of Auckland:
- Rural Northwest – Rural areas and towns to the North and west outside the main Auckland Urban area. This includes the likes of Huapai and Warkworth.
- Hibiscus – The urban area of Orewa, Silverdale and the Whangaparaoa Peninsula.
- North Shore – The old North Shore City Council area.
- West Auckland – The urban parts of the old Waitakere City Council area.
- Central City – The CBD and neighbouring fringe suburbs like Freemans Bay, Ponsonby, Grey Lynn, Eden Terrace, Grafton, Newmarket and Parnell.
- Other Isthmus – The old Auckland City council area outside of the Central City.
- South Auckland – The urban areas of the old Manukau City and Papakura District council areas.
- Rural Southeast – The rural areas and towns in the South and East of Auckland including Pukekohe.
Source and Credit: Transport Blog (accessed 2013) http://transportblog.co.nz/2013/11/07/strong-employment-growth-in-the-central-city/
What those tables do show and is expected that the primary CBD and surrounding areas of the Central Isthmus show strong growth patterns in a strong economy. You can also see North Shore doing well owing to better connections (the Busway) to the CBD and more intensified development around Albany and Smales Farm.
The area that made me smile though was South Auckland with its very strong growth – although some blips along the way. Those blips including that the growth has not been universal and some areas have declined as noted by Transport Blog. South Auckland is ranked third in job centre/employment numbers and will stay that way for a while.
For those paying attention to the South (yeah okay we were not meant to compete against the CBD) Manukau has two tower cranes and a mobile crane in the area while Takanini picked up a tower crane in the new industrial area as that area develops at full pace. My “South Auckland – The Rising Jewel in Auckland’s Crown“ post does mention the increasingly strong growth occurring in the south despite some setbacks including the Unitary Plan.
Yes we are going to see the need for those “54 building” Mr McMahon has pointed out but, it will be in a more spread context between the CBD and two of Auckland’s Metropolitan Centres (Manukau and Albany).
This extract from my “A Perspective on the CBD and Waterfront” post outlines some reasons drawing on Rod Oram’s analysis last month:
We see some economic number crunching in the above section from Oram based on PwC’s analysis earlier this year. Yes we are seeing growth in the CBD and the immediate fringe areas as outlined in the ‘Strong Growth in Auckland‘ post. While that is good what Oram and PwC were pointing out that we should have reasons for concern:
- Direct and indirect fulltime equivalent jobs will grow 2.7 times from around 14,500 this year to 39,400 by 2040
- But the economic activity they generate will grow only 2.8 times to $4.12 billion (in constant dollar terms). So, the non-port waterfront’s contribution to regional GDP will barely shift from around 5.5 per cent currently.
- Some 12,600 waterfront jobs in 2040, about one-third of the total, will be in low-value, part-time and seasonal work in the cruise, tourism and hospitality sectors
- Another 12,500 jobs will be “high productivity”, which PwC doesn’t specify nor give any indication of where they will come from;
- and a further 14,300 in “other” work
Just quickly in regards to “other work” I wonder if they mean this: “On the Phenomenon of Bullshit Jobs.” While it is a fascinating read and gives some interesting insights it does raise concern if that if those 14,300 “other” jobs come from err BS Jobs then this in truth the Port will be providing the only real and relative boost to the CBD and wider Auckland Economy. Meaning we in real terms stagnate around that 5.5% mark (quoted in bold above) as we have not realises this: ”many more Auckland businesses must learn how to earn a living internationally, not just in this tiny domestic market.”
So where will the real growth come from is the CBD looks to be stagnating at 5.5% contribution without port help. Our exporting sector that earns and attracts currency and investment overseas. That catch is though you will not find the bulk of the exporting sector (apart from Port of Auckland) in the CBD regardless of an innovation precinct being there (or not).
You will find our exporting sector and even our start-ups (unless subsidised beyond the hilt to be in the CBD/Wynyard Quarter) here: “ The export jobs won’t be found down here. Look south instead to Manukau and surrounds.” That came from a Waitemata Local Board member on Facebook.
And it is true, you will find your exporters and most likely start-ups in actual established industrial areas near good commercial and transit links. Manukau and Wiri are two places that tick those boxes although they are not the only ones in Auckland. Of course this will lead to another post on why Innovation Precincts done or subsidised by Local and/or Central Government(s) are a waste of time and that exporters and start-up often search out established areas.
Edit: New material added
I just picked this up from The Vancouver Sun website after I had published this post initially. It backs up both this actual post and the quoted posts as well.
From The Vancouver Sun:
UDI/FortisBC Housing Affordability Index: Price just half of the affordability equation
BY TRACY SHERLOCK, VANCOUVER SUN OCTOBER 21, 2013
While Metro Vancouver is notorious for being the most expensive place to live in Canada, it also has the dubious distinction of having lower than average median incomes.
When housing affordability is discussed, the price of houses usually attracts all of the attention. But of equal importance to the equation is income — if incomes don’t rise but house prices do, it’s obvious that affordability will decline.
Metro Vancouver’s median family income is $67,550, which is below the average for all cities (in Canada), a British Columbia Business Council report shows. In 2009, the Vancouver Census Metropolitan Area ranked 22nd out of 33 Canadian CMAs for median family income.
“This is surprising and somewhat concerning because it indicates that incomes are not that high for the typical family,” said Jock Finlayson, executive vice-president and chief policy officer at the business council.
Finlayson said the reason for the low incomes is that Metro’s economic base is not the type to generate lots of high-paying jobs.
“There’s lots of employment, but a lot of it is low to moderate employment,” Finlayson said. “We don’t have a Silicon Valley, we don’t have a lot of major corporate headquarters.”
There is also a problem in Metro with another key factor in generating and sustaining jobs that pay well, something called “job land” — the land where industries, manufacturing and other businesses operate — or rather the lack of it.
“People don’t necessarily connect the dots between protecting our strategic lands for job space and the affordability of our region,” said Brent Toderian, planning consultant at Toderian UrbanWorks and a former director of city planning for Vancouver. “The cities that have abundant and flexible land for job space are going to be the most successful, nimble cities. Under globalization, things changed and a lot of cities gave up this land base. Once the industrial land is gone, you can’t get it back.”
It basically backs up what I have said earlier about the CBD, the jobs it often attracts, the risks we run with the CBD, and why industrial land is so critical for a large city like Auckland.
There are some bright spots in Metro employment, including the technology sector, which includes jobs like engineering, architecture, environmental consulting and geosciences, and which Finlayson said doesn’t get the attention it deserves.
“If you look at this industry as it’s defined by BC Stats, it’s got over 80,000 employees and is probably five per cent of gross domestic product provincewide,” Finlayson said. “It’s an important part of the industrial base here. It is a good fit for our region because it is clean and it’s not land intensive. They can operate with a much smaller physical footprint.”
Many of these businesses are found in the industrial parks of Burnaby and Richmond, Finlayson said.
But others prefer mixed-use spaces like Gastown or Yaletown, Toderian said.
“Many employers like mixed-use communities like Yaletown, but others need cheap, low-tax industrial lands where they can build large-footprint operations. For example, a multi-storey for a Microsoft office or an operation that’s building hydrogen engines or solar cells along the Fraser River or the False Creek Flats,” Toderian said.
Ultimately though, Toderian said the most important thing is to keep land that is available for use in the future.
“It’s about being able to adapt. I often used to say when people would ask me what I would see the job space being used for 50 years from now, the one thing I can tell you is that anything I guess will be wrong,” Toderian said.
“But you are putting all of your eggs into one basket if you’re turning your whole city into mixed-use, high-density neighbourhoods. You’ve got to preserve job lands for the other types of jobs and it’s those nimble and resilient cities that keep the job space flexible, I think will win.”
Yep we will get some high-sector growth in the CBD but as the above points out, Rod Oram points out, the Local Board Member from Waitemata Local Board points out, and as I point out the industrial bases of: Wiri, East Tamaki, Takanini and Drury South need to be preserved as industrial land to allow our industrial economic centres ticking along. Also again it illustrates the huge push I am giving Manukau for the last three years as Manukau is going to end up as The Hub not only for South Auckland but also the supporting hub for our very much needed and growing industry located Southern Auckland. Something a few like Transport Blog could be missing in their own analysis.
So the question to McHahon is what kind of jobs and people will be working and living in the CBD. Because as we watch The Golden Banana situation evolve the job and residential dynamic will be very unique through the upper North Island. And the last thing we want popping up in the CBD is the en-mass spring up of those errr “bullshit jobs.”
Also the table back at the top of the post shows there is strong growth not only in the CBD, but South Auckland and the North Shore as well. This as result will not only diversify the growth but spread it around as well – most likely on needs as mentioned above.
So I wonder if Mr McMahon was cherry picking the statistics to make a claim about the CBD and Wynyard Quarter (which if it was not for the Port, it would be stagnating rather badly)…
I hope not