I’m doing a smaller roundup of articles midweek due to a lack of time to write proper blog posts. Regular service will – hopefully – resume before much longer.

Let’s start with Christchurch. Rebecca Macfie writes (in the Listener) about what has been learnt in the five years since the Canterbury earthquakes. She highlights some lowlights:

Beyond that lie two large empty blocks that have been bought and cleared by Cera for a massive convention centre. The proposed complex was tagged by Earthquake Recovery Minister Gerry Brownlee as one of the priority projects in the Crown’s 2012 masterplan for the rebuilt CBD. Like an economic defibrillator, it was to kickstart the central city economy.

“In the near term it will provide certainty and confidence to the private sector, encouraging private investors to accelerate the rebuild of central Christchurch,” he wrote in advice to Cabinet in 2013. Longer term, it will “leave a legacy of buildings, public spaces and activity that will help define the rebuilt Christchurch”.

Construction was to be completed by early 2017, according to an “indicative anchor project delivery schedule” published by Cera in late 2013. But there’s nothing here except a sullen grey expanse of gravel and broken concrete, ringed by security fences.

Duval, like everyone else in Christ­church (including Mayor Lianne Dalziel), wants to know what’s going on, but no one is telling.

“We’re starved of information, and that creates uncertainty,” he says.

Some big calls that now look like they may have been the wrong calls:

The centralisation of control of such an enormous and complicated recovery task in the hands of a new government department and its minister alarmed some international experts, who wrote to Prime Minister John Key in late 2011 urging change. Among the signatories were Doug Ahlers, a recovery expert from the Harvard Kennedy School of Government, Sir Richard Leese of the Manchester City Council, and Kit Miyamoto, a seismic engineer with extensive experience of post-disaster reconstruction.

Offering their experience from “similar-scale disasters in other parts of the world”, they called for a governance structure that allowed business, non-government and community sectors to be heard, and warned that the decision to demolish the majority of the CBD (including repairable buildings) would lead to higher costs, a loss of city identity and a slower recovery.

“I think I can say with confidence that this could be considered by some as being worst practice,” wrote Ahlers of the Cera structure.

And some highlights:

There have also been successes – the wonderful new playground, a user-friendly bus interchange, well-advanced construction of a justice and emergency precinct for multiple agencies and 2000 staff, and an emerging “innovation precinct” that will be home to Vodafone and Kathmandu. The emerging retail precinct, consisting of four major developments driven by long-established local investors Nick Hunt, Tim Glasson, Philip Carter and Antony Gough, is generating high hopes that the area around Cashel St will become a vibrant hub.

More than 85% of the $3 billion job to repair the city’s pipes, drains and roads has been done (although only to a patch-up standard, rather than “as new”). The innovative Scirt alliance (Stronger Christchurch Infrastructure Rebuild Team) of big construction companies, local and central government is credited as a highly successful approach to getting through the horizontal infrastructure work.

New Zealand will have more natural disasters. Maybe not next year, and maybe not in my lifetime, but after all, we’re sitting on top of two shaky isles. So we need to learn from Christchurch’s experience, which means having an honest public conversation about what’s gone right and what’s gone wrong. I’ve been happy to see some challenging commentary popping up around the fifth anniversary of the quakes. May the conversation continue.

Closer to home, Gary Steel profiles Auckland’s Real Groovy record store on Audioculture – a vivacious survivor in an industry that’s undergone a few tectonic shifts over the last few decades:

As Auckland’s longest-running secondhand record store, Real Groovy has not only proved its most persistent critics wrong by surviving and prospering, but has also seen off nearly all of its competition in doing so.

Perhaps our most-loved record emporium, and the only one that bears serious comparison to California’s enormous Amoeba Music, Real Groovy has weathered a chequered past and a near-complete meltdown to revitalise itself as vinyl and music-related ephemera slowly overtake the mountains of unloved compact discs and DVDs.

Few of the busloads of daily browsers can know of this genuinely iconic shop’s beginnings up the road and around the bend from its famous location in Queen St, and it’s hard to picture just how a couple of guys with a tiny space on Mt Eden Rd could have transformed their used vinyl record shop into its current giant warehouse-like operation.

It’s been a while since I seriously spent a lot of time in a music shop – not because I’ve shifted to digital, but because I seem to have less time to seek out new music these days. But it wasn’t that long ago that visits to the big used record shops was a highlight of trips into town. There was – is – something great about browsing through big stacks of music without being totally certain about what you will find.

Cities are great in the same way: they’re big and varied, which means that it’s possible to be surprised by them. And without the element of the unexpected, what’s the point in living in the first place?

One thing that I am consistently surprised by, in cities, is the degree to which we’re willing to neglect them. Cities are, to use Ed Glaeser’s phrase, humanity’s greatest invention. But as Philip Kennicott points out in the Washington Post, American cities’ metro systems are currently undergoing shutdown because the systems were left to decay:

But above all, it is closed today for the same reason that much of what was built during the Great Society era now looks ugly to us: years of underfunding, disinvestment and deferred maintenance, a neglect that comes of a deeper social and political dysfunction. We have learned to tolerate decay, and ugliness.

That’s the reason Pershing Park, near the White House, is an eyesore today. And the same reason that outhouses in the National Park Service are often overflowing, and fountains all over Washington are out of service or nearly so. Demolition by neglect is now our maintenance policy, and not just when it comes to things we have made in bricks and mortar; it erodes our civic landscape, too.

Even more frightening: We are learning to adapt. In Flint, Mich., residents use bottled water, just as people all across the Third World drink bottled water. And today, in Washington, the city walks, bikes and hitches a ride, just as billions of residents of impoverished cities throughout the world regularly improvise their commute.

Mid-century infrastructure is reaching the end of its useful life all across the nation. But much of that Great Society infrastructure was a response to an earlier infrastructure that was, by the 1950s, reaching the end of its life. And the response then was to say: Let’s rebuild it, and let’s make it as beautiful as we can.

One of the things I appreciate about Auckland, right now, is that we are willing to invest in good design for public infrastructure. You can see that at new rail stations like Britomart and Panmure, where roofs and skylights have been designed to echo Auckland’s distinctive volcanic cones. You can certainly see it in the Pinkpath. Aesthetics don’t have an infinite value, but I’m glad that we’ve decided to assign them a non-zero value!

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    1. Real Groovy is the best big record store I’ve ever been to. Honestly, I was disappointed with Amoeba in SF when I went there a few years ago.
      Also, Flying Out on Pitt St, Southbound on Symonds St, and Rebel Soul on K Rd show record stores in Ak are in good health.

  1. Wish Cera would sell the Convention centre site to someone like Ockham. Chch CBD needs more people in buildings, not just more buildings. Someone has to start running a train service down there, whether it is CCC, WDC, or CRC. Someone just needs to start it and show that it’ll work to get everyone else on board (probably CCC).

    1. I wish the government would forget about the Christchurch convention centre and use the site for a great big covered wholesale/retail food market. It would cost a fraction of the price, provide more activity and provide something useful that doesn’t need ratepayer subsidisation -competitive food prices for kiwis.

      The hundreds of millions the government plans to waste on the convention could easily get passenger rail restarted in Canterbury -our second biggest and second fastest growing region -another 500 odd houses consented last month. Surely it is a no-brainer.

      There is exciting plans for the old convention centre site http://www.stuff.co.nz/the-press/business/the-rebuild/77900697/Half-billion-dollar-plan-for-Christchurchs-old-convention-centre-site

      Which is good. Positive news about the CBD have been slim pickings for the last 5 years and the recent positive vibe seems to be despite of CERA/CCDU efforts not because of it.

      Re: Building consent numbers -Interest.co.nz shows what is being built (nationwide) is only for the top end of the market. Hoping we will build our way to affordability currently seems unlikely. http://www.interest.co.nz/property/80819/building-consent-levels-are-points-new-tough-reality-it-top-end-supply-constrained

      1. That’s an interesting bit of data on consents. It suggests (to me at least) that we may be encountering issues with construction sector capacity – i.e. not enough people to swing hammers. A bit concerning given the fact that Australia’s mining/infrastructure boom is over, resulting in net migration to NZ for the first time in a long while. Construction prices are allegedly rising as a result.

        However, I think you’re being overly pessimistic in saying that construction won’t improve affordability. Today’s expensive new homes become tomorrow’s slightly run-down starter homes. (As long as we keep building them.)

        1. There is different ways to interpret the data Peter. The negative being -urban land prices are escalating so much that only the very rich are building. The danger is this turns into a speculative bubble like Ireland/Spain.

          The more positive thinking is that supply eventually meets demand and a steady state of stable prices and construction rate is reached. Nick Smith and John Key say this has happened in Canterbury and will happen in the rest of the country soon.

          1. Yeah, its land price, pretty obviously. If there is a unprecedented worker migration from country A to country B. Country A is having a construction boom and country B is finding construction expensive – the one thing you can guarantee is that country B’s problems are not due to a labour shortage.

            Our speculative bubble isn’t like Spain/Ireland, if only it were then we would get some apartments being built. Our speculative bubble is that there will always be excessive demand for single dwelling houses. We get the same massive debt bubble and when it bursts we’ll have built a whole lot of nothing.

            You can track a sort of stabilisation in the Canterbury market through the rental market. Rents are beginning to stabilise or even fall. In Auckland rents continue to rise. To create Auckland rental returns offering the sort of a return on apartment investment that would be sufficient to overcome the cost of land in Auckland, rents will need to increase by about 100% from their current level, then we’ll start a construction phase. I’m renting in Auckland and not looking forward to it.

          2. No, I’m not talking about land prices, I’m talking about building costs.

            I’ve heard a number of reports that many Auckland construction firms are fully occupied with work at the moment, and only willing to take on new work at higher rates. That’s not a land price issue – that’s a construction industry capacity issue. Apparently per-m2 construction costs for new apartments have risen 15-20% over the last 18 months or so. People are also getting concerned that the quality of new builds is falling – evidence of limited availability of skilled labour.

            I’ve said it before and I’ll say it again: New Zealand’s housing issues don’t start or end with planning regulations.

          3. …many Auckland construction firms are…willing to take on new work at higher rates. That’s not a land price issue – that’s a construction industry capacity issue.

            This is an issue which can be easily remedied by making their work more profitable, giving them a higher rate makes more work happen. This is very much an investment stream / cost structure issue. We will maintain investment streams and bring costs down – then we get more buildings.

            Let’s see if we can find any outlier costs in the Auckland property market that we could reduce and increase the profit margins. Can anybody find the outlying cost structure that is massively out of whack? That’s right, it is land cost.

            I really don’t care (apologies – you’ve obviously put a lot of work in to it) if you are right or Demographica are right about how the damn thing got so high. We just need to make it lower (and do it in a way that doesn’t harm investment streams), we need to derestrict supply.

          4. Keep in mind that “derestricting supply” doesn’t mean moving a line on a map. It means building a fuckload of costly bulk infrastructure to greenfield areas so that they can develop at some future date. Late last year Auckland Council published a Future Urban Land Supply Strategy that identified costs of around $17 billion (in undiscounted terms) to enable up to 110,000 houses to be built in greenfield areas. (That’s not accounting for costs of local roads, pipes, etc – those would be covered by the developer.)

            So what’s your plan? Build all $17 billion of infrastructure next year? Build it over a 5-year period? Build even more to free up even more land? Who should pay for it, and how? Those are hard questions with no straightforward answers.

            You keep arguing that this is a really simple issue that we could easily fix, but the truth is that it’s not.

          5. My plan would have been be to spend that original $17billion around Auckland the City. Not spend that $17billion around Auckland region the Exurbs. Unfortunately, since we can’t take back the money wasted financing car-centric exurb sprawls already underway in Orewa and Warkworth and others, that price would now increase. So lets fudge in another $10billion. Total $27billion. A $10billion increase over now.

            Auckland’s 70:30 split is highly achievable, if we have a 30% growth on Auckland the City. We’d be a normal city with normal property prices. Meaning a $300,000 reduction in lot prices of new land. Spend $10billion more to save $33billion in costs. A $33billion cost that doesn’t even include the commuting pollution from Warkworth and Orewa and all the others.

            Take the money earmarked for Dairy Flat and use it to expand Albany north and west. Take half the forecast spend on Kumeu and spend it on Swanson (it has a railway station, don’t you know). Leave Pukekohe and Paerata in place (because they also have a railway line) and spend the new $10billion on the Clevedon Valley. Stop spending money on Warkworth and use it to make sure the CBD is going to be ready for the extra 20,000 apartments we will build.

          6. Keep in mind that “derestricting supply” doesn’t mean moving a line on a map.

            No, it means moving 5 lines on a map. Making the area around Auckland much bigger, whilst making the others – around Orewa, Warkworth, Kumeu, Pukekohe/Paerata – much smaller. This produces cost increases and cost savings.

          7. Peter, Anguses argument which I have heard from some respected economists is that if land is unrestricted on the fringes -by allowing out of sequence developments on rural price land. This will halt the escalation in urban land prices -which is what is stopping intensification. This happens because most property owners with upzoning potential will consider (speculate) that the capital gains of doing nothing, is better than opting out and building, if property inflation is greater than the return on investment.

            Once urban land inflation is stabilized, the market will return to its natural intensification/extensification ratio, because speculation and land banking of upzoned properties will stop. Historical statistics of Auckland’s intensification ratio is around 70/30%.

            So relaxing/removing supply restraints on Auckland’s urban limits does not mean all the new supply will be provided by distant/expensive sprawl suburbs. In fact for every 100,000 houses built on greenfield sites, 200,000 to 250,000 houses will be built on brownfield sites.

            Those 100,000 houses (which will take decades to build -so expensive infrastructure is not needed immediately) are likely to around transport nodes -because that is attractive -so could be places like Swanson Station-even Waitakere Station -if electrification of the train line was extended. Other similar opportunities exist north and south. Would that be so bad? Google Houten 50,000 people living around two train stations in developments over several decades from the 70/80s. A few of those plus intensification and Auckland is sorted.

          8. What Brendon said +1.

            Except I am more concerned for the currently sequenced spatial development plan for Auckland is one that is pricing people out of Auckland and into a series of highly dispersed nodes. Nodes that are dispersed on a linear body of land.

            I think the currently sequenced development allocation of greenfield area might be about the right size, if we just stop it being in the wrong spaces. Meaning I think minimal overall cost increases will be incurred.

            But that said, out of sequence development could certainly also be a good idea and reduce land cost. Just it would cost more.

          9. Yes, Brendon, I am aware of that model. I’ve got a slightly different hypothesis, though: the thing that people want (and are currently short of) is not land, but *housing* in a useful place. After all, if people just wanted land, then a bare paddock would meet their needs as well as a residential section.

            As for the competitive aspect, I would argue that rezoning the existing urbanised area for higher-density development would result in more competition than rezoning land on the edge of the city. In the former case, there would be 500,000 urban landowners competing to capture the rents from meeting new housing needs via building up, as opposed to a few thousand large landowners competing to capture the rents from building out. What’s the harm in trying it?

            I also don’t think that you and Angus have clearly thought through the greenfield land supply issue. By definition, “development-ready land” means land that is *already* serviced with bulk infrastructure. Consequently, regulatory constraints on urban expansion largely follow infrastructure constraints. The $17bn figure for greenfield growth cited in the AC document is large – equivalent to around 20% of Auckland’s overall GDP, or five times the annual output of the city’s entire construction industry.

            Some costs can be shifted onto buyers, and it may be possible to bring some of those costs down, e.g. by pricing to manage demand or simply providing worse infrastructure. But fundamentally, this represents a real constraint, rather than a made-up one that can be changed with the flick of a bureaucratic pen.

            Finally, if you think that it’s necessary to loosen infrastructure constraints, I’d recommend that you:
            * Advocate for councils and central governments to raise rates/taxes to pay for more infrastructure, or, alternatively divert money from other regions like Canterbury and Wellington
            * Support proposals to increase mobility by investing in rapid transit to growth areas: http://www.congestionfree.co.nz/
            * Advocate for congestion pricing to better manage busy roads in the context of growth: http://greaterakl.wpengine.com/2015/06/16/if-congestion-is-so-bad-we-should-price-it/

            That’s all I’ve got to say on the topic. Been fun!

          10. Angus the point about out of sequence development is that avoids the problem of monopolistic behaviour, land banking etc which is a huge problem. Relaxing restrictions actually provides a massive benefit for the whole city -for every one house built affordably on the outer fringe means there will be two or more houses built affordably closer in due to the stabilization of the urban land price curve.

            Now I agree we need policies to manage this process -to mitigate the worst aspects. So for instance getting PT and cycling facilities out to these suburbs from the get go. Ensuring the intensification rate is encouraged as much as possible -to ensure the city does get the two or more houses built closer in – by decreasing intensification restrictions – parking requirements, density rules…. Look at institutional players -Urban Development Authority -with the power to compulsory acquire land (Productivity Commission suggestion) to encourage big intensification around natural nodes. Maybe for smaller intensification developments there could be some system to help voluntary neighbourhood intensification schemes, as I have recently suggested https://makingchristchurch.com/why-land-contiguity-is-causing-market-failure-in-new-zealand-s-cities-eb00577c8d91#.lz3m2r49d

            Also people building far away should pay the full cost of that -so MUDs and higher fuel taxes or road pricing or congestion charging…

            P.S Pete I didn’t read your comment before posting mine -but I see we agree on many of the mitigation measures : )

          11. “This will halt the escalation in urban land prices -which is what is stopping intensification.”

            I really don’t think high land prices are stopping intensification. The planning rules are doing that.

            High land prices are generally a sign that many people want to live on that land. If many people want to live on that land then it can probably support intensification.

          12. Patrick,

            Short version: you are happy with a high cost environment and think in this extremely high cost environment lots of stuff will be built.

            So our rents will be going up by 100% or 200%? Can’t wait.

          13. Frank it is not high land prices which stops building/development -it is the high rate of growth in urban land prices. The analogy is growing trees commercially -whilst trees are growing and their value is increasing at a rate faster than next alternative investment (typically the current interest rate is used as this ‘discount rate’) then the tree will not be harvested. Once the rate of growth drops below interest rates is the optimal time to harvest the trees.

            Investors speculating on Auckland property will be doing the same sort of calculation to determine when is the best time to build (or sell to a builder) on their up-zoned property.

            Frank I do agree we need to allow much more intensification in Auckland though -so we don’t disagree on the need for planning reforms etc to help assist this.

          14. “Frank it is not high land prices which stops building/development -it is the high rate of growth in urban land prices.”

            Yes agree. This is an issue with lack of zoned capacity causing people to bank land rather than develop. But the high land prices of themselves aren’t stopping development.

          15. Yes it is an important clarification you make Frank. Considering rising land prices turns a static model (high prices centrally -low prices fringe) into a dynamic model. It is a complication that can be difficult to understand.

            It is also just one factor inhibiting intensification -which I agree with Peter Nunns -there is plenty of evidence there is a demand for. Planning rules etc are also inhibiting the housing intensification supply response.

          16. Frank, “But the high land prices of themselves aren’t stopping development.”

            It is a combination of high land costs and low apartment prices.

            Apartment prices in our existing market are the better indicator of how much someone values living here. Auckland land price is north of $600,000, but the price of an apartment is south of $400,000. In Sydney the land price is $500,000, but the price of an apartment is $900,000. (Converted to NZD). We don’t get much built here because our costs are high and market prices cannot support profitable construction.

            The “good news”, as Peter Nunns alludes to above, is that this will change over time and if we allow massive up zoning we will get stuff built. The “bad news” is that to do that we are going to need to make rents go up. To overcome our 15% higher land cost, we will need to have rents 15% higher than Sydney.

          17. Angus: “Patrick, Short version: you are happy with a high cost environment and think in this extremely high cost environment lots of stuff will be built.”

            As Patrick wasn’t involved in this Ill assume you were responding to me? If so you are misrepresenting my position. I believe the current high costs are an outrage and we should do everything possible to lower house prices and rents. Including releasing more greenfield land for development – but this is not as simple as changing the zoning as there are issues with funding infrastructure that need to be resolved.

            I also don’t believe you can collapse the price of well located land by providing more land 30 km out (though this would put some downward pressure on it). I think allowing dwellings that consume less land per unit and increasing the area of land available for higher intensity will do more for affordability.

            You keep claiming that Sydney has cheaper land prices than Auckland but what are you basing that claim on? I would be very surprised if land prices proximate to the centre in Sydney are cheaper than in Auckland.

          18. Frank, I was responding to Peter.

            Land prices to which I refer are the median new section costs, as a strong indication that land costs too much here. And yes the upper decile land price in Sydney is still, thank goodness, higher than Auckland. Because it is worth more, as a bigger richer city surrounds it.

            The freeing up of regulations you suggest does have an effect and comparing the cities with near equivalent new section costs Melbourne (where you can build apartments in many areas) and Brisbane (where apartments are almost entirely restricted to a tiny central area). In the current property boom Melbourne is set to build about 275 new apartments per 10,000 people and Brisbane is only building about 210 new apartments per 10,000 people. This is big effect.

            The freeing up of peripheral land to lower the price also has an effect and comparing cities with similarly restrictive zoning on land Brisbane (new land cost of about $300,000) and Auckland (new land cost of $600,000). In the current boom Brisbane is building about 210 new apartments per 10,000 people and Auckland is only building about 60 new apartments per 10,000 people. This is a much bigger effect.

      2. Also regarding those building consent numbers -that seems to Canterbury’s plateau -its new normal and it is more than Waikato’s and Bay of Plenty’s combined. It is four times the build rate of the Wellington region. This being despite Christchurch lacking most of a CBD and not getting vast sums of money thrown at it for it’s transport infrastructure like Wellington’s Transmission Gully and the Waikato Expressway…. http://www.interest.co.nz/charts/real-estate/building-consents-residential

  2. Infrastructure neglect – the other side of the “I am going to keep your rates down” promises. The civilisation purchased with rates and taxes has become less and less valued.

    1. So true. Actually, we have forgotten what rates and taxes are FOR; and Councils don’t want to admit they need new sources of funding to KEEP UP the infrastructure in existing built areas, so they want to force developers to do “:intensification” and then shake them down for “contributions”. Utterly bad faith, seeing the basis for forcing them to do so, is that “there is spare capacity” so “we don’t need greenfields”.

  3. All round the US and Canada I noticed a lot of spalling concrete, they say it is caused by the salt used to combat the ice however I feel that the mass concrete structures built after the war were may be over designed for the loads that they carried then but must now be getting to the stage where the present day loads are a threat to their integrity.

  4. The government completely stuffed up on Chch. Incompetence at its best. The rebuild should have been as is where is. I.e. put the convention centre back where it was & don’t make all the accessible city street changes. The stadium could have been repaired where it is. The government funding should have gone to getting the horizontal infrastructure in the ground repaired as quickly as possible. All it has done is delay the recovery of Christchurch and burdened ratepayers with additional costs (rate rises are projected at 5%/yr to 2025) due to the additional capex. All the fancy changes (nice to have but not needed) could have occurred in the future when the city could afford it. As an ex resident of Chch for most my life I was there in Aug 2015 and was completely dismayed at progress. In the CBD only a few new buildings have gone up and the rest is vacant land. It will be another 10 years before the rebuild is complete. All the fancy changes (nice to have but not needed) could have occurred in the future when the city could afford it.

    1. David,
      You have articulated my opinion precisely. It has been one huge cock up from start to (never) finish.
      Add dairy, Auckland housing, the environment to that list (it goes on). This government is marked by incompetence. That’s what happens when you govern by focus group.

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