Liam Dann: Auckland CBD faces 'triple whammy' of disruption

Auckland's CBD is being battered by border closure, infrastructure work and social change. Photo / Michael Craig

OPINION:

The pandemic has hit Auckland harder than many parts of the country.

That's before you even add up the costs of the latest lockdowns - which an ASB economist estimated to be around $200 million a week.

Auckland is an open international city and border closures are hurting, especially in the CBD.

Typically at this time of year the city is buzzing with an influx of international tourists - many of them older, wealthier cruise ship passengers focused on eating, drink and shopping the downtown district.

Meanwhile uptown the international students return, bring youthful energy to the spaces around the city's numerous cheap and cheerful eateries.

Compounding Auckland's CBD woes is the timing of several major infrastructure projects which are congesting traffic and messing up the streets, limiting foot traffic for many retailers.

Major works include the Quay St and Karangahape Rd enhancements, the SkyCity
Convention Centre build and of course, the massive City Rail Link (CRL) construction.
For anyone taking a stroll around the CBD for the first time in a while, it can all look a bit shocking.

Auckland also faces the additional challenge of being the city of lockdowns.

Its status as New Zealand's primary international arrival point puts the city at the frontline of virus control and is taking a toll in the form of regional lockdowns.

We can acknowledge the macro-economic view that lockdowns have done less damage that first expected.

As economists have pointed out, there has been a strong post-lockdown rebound effect.
Consumers have simply delayed spending or diverted to other activities, often closer to home.

So the net loss to the economy isn't so bad.

But that view tends to average out the pain across sectors and regions.

For some businesses - particularly those in the CBD - the damage will be permanent.
There have been and will be more economic casualties, a fact to which empty downtown stores bear testament.

In the most recent ASB Regional Scoreboard - for the third quarter of 2020 - Auckland slipped two positions to rank as the 13th worst performer of 16 regions.

Only Southland, Canterbury and Otago were in worse shape.

In a commentary (headed up: "City of Cones") ASB economists noted the result wasn't surprising, given the move up to Covid alert level 3 during the quarter.

The region was also last in the country for consumer confidence, and one of the weakest regions for employment and retail trade (though it still enjoyed a lift for the latter).

Westpac, in its Regional Roundup, took a more optimistic tone.
It emphasised that the red-hot housing market was likely to ensure an ongoing Auckland recovery.

The Westpac report acknowledged the loss of foreign visitor arrivals as "a big deal" for Auckland which is a major tourism region.

The situation had been made worse by the significant fall in domestic business travel to the city.

But this was being offset to some extent by the strength of the construction and building boom.

Recent StatsNZ data showed that in 2020 building consents were issued at levels not seen since 1973.

The pace was led by Auckland which saw 16,700 new dwellings consented over the year.

Ultimately housing market strength drives the economic confidence of the home-owning middle-class - although it will hardly be welcomed by those with an eye on the country's growing social inequality.

That driver has seen retail spending bounce back in the past few months.

When we look at the challenge facing Auckland it is worth acknowledging another even more fundamental issue.

On top of everything else, Auckland's CBD was already in the thick of what is likely to be a historic transformation of the way we work, commute and live.

All over the world a behavioural shift in the way we work has been building for some time.

Technology is diminishing the need to commute. Businesses are able to decentralise and to run offices in cheaper suburban locations.

Covid-19 didn't cause it but has rapidly accelerated the trend.

We may yet see some return to normal service as the pandemic subsides.

But the larger historic trend - driven by technology - is unstoppable.

When we factor this in we see that Auckland's CBD is actually facing a triple whammy.
It is not hard to understand why the city feels shellshocked.

Construction of the City Rail Link (CRL) has caused disruption along Albert St in the Auckland CBD. Photo / Jason Oxenham

Thankfully, the council's strategic focus was already leaning into longer term shift in behaviour.

The infrastructure upgrades we're complaining about now have been planned with the shift to a more people-focused CBD in mind.

Planners are reshaping things for a world where cities are more residential, more friendly for weekend visitors.

The emphasis is around pedestrian-friendly environments and accessibility by public transport.

Of course this approach is not without critics and would have attracted some controversy at the best of times.

The progressive strategy has crashed in to the Covid-crunch in a way that is making a terrible mess right now.

We could take a more positive view and recognise that getting this work done now, while the city is already closed to international visitors, has a certain kind of functionality.

The opening of the major works over the next few years is likely to coincide with the gradual reopening of the world.

By the time the CRL is complete Auckland should once again be the thriving international city we all want to be.

But even with that positive view we need to recognise that the combination of Covid closure, infrastructure disruption and broader social change has been and will continue to be devastating for many small businesses.

Our city is in a time of transition.

It is a transition that Covid has made more dramatic and more damaging than anyone would have liked.

But Auckland is well placed to manage this transition - given time.

We will have a CBD that people want to live in.

That will be a lifeline for our city as the world shifts away from the classic centralised workforce.