Christchurch CBD commercial rebuild will supersede residential in 2017-18: report
Christchurch's commercial rebuild is set to peak in the next year as delayed public projects finally take off.
It should overtake residential as the main driver of the city's recovery.
Overall, construction is plateauing, but an estimated $6 billion is still to be spent in the commercial sector, much of it on public projects such as the long-delayed Convention Centre and Metro Sports Facility.
A report by the government's Greater Christchurch Group (GCG) said public projects had taken longer than expected to pick up, but would drive a commercial boom "forecast to peak during mid-2017 and mid-2018".
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Several factors, including "market capacity" constraints, drove the delay. "The recent easing in residential and light commercial construction appears to have freed up market capacity for the public sector projects."
The report showed just $2.5b of the expected $6.3b investment in the public sector rebuild had been spent by the end of 2016.
The $6b still to be spent across the commercial sector accounted for about half of its estimated $12.5b budget.
Both spending rates were considerably behind the $31.5b citywide rebuild, which was about 65 per cent complete. With such a disparity, commercial quarterly expenditure "may soon supersede residential", the report said.
Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said the public sector project delays were not only because of resourcing.
"I think the bigger limiting factor, and the thing that runs past most people, is for two years our central city was cordoned off. For a year we were putting in the horizontal infrastructure. We've only had three years of this."
2017 was the "tipping point", he said.
"I've always said [it] is the year that the physical manifestation of the rebuild of the central city outweighs the negative sentiment about a lack of progress."
A large chunk of the work will come from big-ticket public projects like the convention centre and metro sports. Recent figures from the Canterbury Development Corporation showed private sector development was expected to be three-quarters complete by the end of this year.
"Private work and CBD construction is now beyond its peak," Anthony Leighs, of Leighs Construction, said.
"The commercial sector will remain strong for the near term, underpinned by the large jobs such as metro sports facility and the convention centre, along with other government and institutional work."
Christchurch had a well-documented glut of vacant office space, but commercial opportunities remained in the private sector. Christchurch developer Ernest Duval said these would be in the hospitality industry, particularly hotels, where capacity was increasing, but still only at about 80 per cent of pre-earthquake levels.
"A number of hotel operators have purchased property around the city, so they've taken a position," Duval said.
"We'll see a progressive expansion of hotel space in the next few years to address the demand created as a consequence of the Convention Centre."
This sector carried its own risks, Duval said. Although hotel capacity was down, occupancy rates were not, and international visitor numbers through Christchurch Airport were well below the 2010 level as tourists bypassed the city in favour of Queenstown.
"We don't want to have pre-quake levels of accommodation unless we're going to get the people coming here and staying here."
A large chunk of the work would come from big-ticket public projects like the Convention Centre and metro sports.