PwC’s Emerging Trends in Real Estate for North America is based on extensive research among the commercial and industrial property sectors. PwC New Zealand partner, Robert Cameron puts the report’s global trends into a New Zealand context.
The 18 hour city
Hong Kong, New York and London are true around- the-clock cities. Auckland and Wellington fall somewhere between 18-24 hours on the business/social clock. At the heart of the 18-hour city is downtown revitalisation. The CBD is not just a workplace in forward-thinking cities and in Auckland and Wellington inner city residential real estate is finding favour with retail/ hospitality hubs springing up to support new residents. Revitalised post-quake Christchurch is being strongly master-planned to be an 18-hour city and Tauranga and Hamilton could be suitable future contenders.
‘Millennials’ (Generation Y) prefer to relocate from cities to the suburbs in their child-rearing years. However, the interaction between jobs and homes is reliant on good, reliable transport links from the suburbs to CBD workplaces. Self-contained, sophisticated suburban downtown hubs are emerging with amenities designed to mimic the CBD work environment - albeit at a descaled level. The “live in suburbia – commute to the CBD” scenario still needs to be attainable and efficient - and will determine if suburbs rise or fall.
The office market
The trend is for office accommodation to take up less space with greater functionality. Office buildings will be higher-quality, higher-performing with more sophisticated space. The whole office footprint will be the workplace with vast, open lobbies, walls and partitions disappearing. Collaborative, connected spaces where workers move fluidly between physical work stations and can opt for private configurations are “in”.
The planning trend in New Zealand is from standards dictating minimum parking spaces per commercial building, to maximum spaces allowed in an attempt to cap private traffic entering and exiting cities at key times. Millennials are increasingly willing and open to using public transport as long as it’s comfortable, reliable and efficient.
Climate change per se is not a high commercial property concern. More tangible and immediate issues are job growth, construction costs, and economic fundamentals.
However, environmental sustainability, energy efficiency and corporate social responsibility are now par for the course and are embedded in new commercial building designs. They’re deemed acceptable costs with inherent long term benefits.
Everyone wants progress but no-one wants change. High frequency bus networks, rapid transport options and streamlined arterial routes take priority but balancing short-term needs with long-term goals is a challenge. Auckland is already feeling the pain with the start of city rail link works.
Consolidation and specialisation
In today’s commercial environment, well-executed smaller projects are proving viable along with big developments – but the stress is being placed on quality.
Flow of capital
Significant global capital has flown from Chinese, Indian and European investors into the New Zealand commercial property market - from existing buildings to new builds.
Investors, providers and intermediaries of real estate capital are looking across the property spectrum including at alternative property types and the upgrading of older buildings.