"It's the economy, stupid"

In the Pipeline _ Notes on a positive start to a New Year.

First published in Architecture NZ Dec 2014

“The forecast value for national building and construction remains at an unprecedented level and shows a sustained rate of growth that has not been seen in 40 years. The annual value of all building and construction, nationally, is projected to increase 48% from 2012 to the peak in 2016 ($35b) and by 32% from 2012 to 2019. The annual value of non-residential building and construction grows by 39% from 2012 to 2019 and residential building by 23%. “

Wohoo. Summer is here, post GFC, post Venice, post elections, the profession is in the midst of a once in a generation opportunity, are you feeling it ?

Hands rubbing together in anticipatory glee, acetate frames, bifocal polycarbonate lenses all steamed up, black polo neck traded for something more couture, it’s the Architect’s moment ?

We can only hope like bears in spring, all are ready to pounce on the feast of a generation. It is all on. Leave your knives and forks at the door. Get stuck in, see you on the other side, satiated. Everyone welcome just let the big fellas gorge first.

Its no secret, in New Zealand there exists in the coming years a very large opportunity to build a legacy, by that I am not talking about the number of Audis in the driveway at the beach house, but a legacy of architectural innovation. Hopefully the latter leads to the former.

Historically down sides of boom cycles have been the opportunity for natural attrition through talent export or cross disciplinary osmosis but also an opportunity for blue sky thinking, academic explorations and idea generation via research and dissertation. It is the upside where research is put to the test and cities are built and legacies are created.

Boom cycles of previous scale are visible in all our cities, as agglomerations of cultural memory our cities are built on time lines aligned with population growth, demand, availability of resources and cash fueled increasingly by global economics and geopolitical dynamics.

The outcome now of this up-cycle remains to be seen but one hopes the perfect storm of demand for quality design, increases in productivity and young talent hungry to build new ways of living that address the issues of our time may leave a legacy of vibrant, well designed compact cities rather than a leaky, car dependent  beige ness.

Who is steering the supertanker?

It is encouraging to see industry leadership has used down time as period of   retrenchment in order to understand the opportunities for a potential retooling and kudos to those involved. We may already be witness to some fractional movement in the supertanker as issues discussed in post GFC think tanks now take form in our environment.

The special housing area act is one such outcome as are rumored changes to the Resource Management Act as a means to streamline urban development. The potential merging of Waterfront Auckland and Auckland City Properties Limited to form NZ’s first Urban Development Authority another topical result. By the way If there is a Robert Moses waiting in the wings now might be a time to step forward.

The Building and Construction Productivity Partnership is a partnership of industry and Government, established in 2010 to address low productivity in the construction industry. It ceased to exist on November 1^st of this year . It has been brought into the folds of the ministry for everything, MBIE, http://www.mbie.govt.nz with former director Chris Kane retained at the helm to continue the good work he was doing up to this point.

The Productivity Partnership  http://www.buildingvalue.co.nz/ aims to build the value of New Zealand's building and construction sector and empower it to become productive, safe and profitable, so that it delivers good quality, affordable homes and provides a foundation for strong communities and a prosperous economy.

The Partnership's goal is to increase productivity by 20% by 2020.

i.e. Using the period of boom as a catalyst for culture change within the industry in order to increase productivity and value of dollar spent.

As part of the research the Productivity partnership has being producing, the National Construction Pipeline Reports are a window into the wave of opportunity upon us. The report draws on updated data from Statistics NZ, projections by Pacifecon NZ Ltd and forecasts by BRANZ covering both residential and non-residential building.

The industry has been preparing  itself at a high level in the wings but what of the SME’s and traditional mom and pop design firms who for now remain the majority. Is it enough to increase club memberships and to up skill in BIM and Rhino to remain competitive ?  With the majority of projected construction spend on the Christchurch rebuild & Auckland what opportunities exist for the rest of New Zealand *?

We need to remember old models don’t work anymore, old models of practice and old models of procuring innovation( google it ). What processes have been established to enable new players to bubble through? Of all the housing currently been planned what percentage is been handled by Architects? Does any body know ? Five per cent used to be the number bandied about. Is that still accurate? In these days of data wealth we should exactly know where architects skills are in most demand. The AIA uses a billing index as a useful measure of understanding the market circumstances in real time.  The October ABI score was 53.7 compared to a 2009 low of 33 and 2006 high of 62.

Work-on-the-Boards is a monthly survey conducted by the AIA's Economics and Market Research group. The survey of firm principals and partners allows participants to track business conditions as they change. Participation enables you to compare your firm to others, track the economy and local business conditions, and use data to target business opportunities. 

Building activity is monitored in NZ BY statistics NZ who have monthly updates on data collected through building consents.

Statistics NZ data for October show Consents in all categories have risen by 20.4% ($2.47 billion) for the year to $14.59 billion. That’s 64% ($5.7 billion) more than consents across the whole construction sector at the bottom of the market in 2011. 

Despite discussion of the need for management of extremes in the industry the business model generally remains the same, it’s feast or famine. Squirrel away for the lows, harvest in the highs. In mental health parlance bipolar is what it is called, a mental disorder characterized by periods of elevated mood and periods of depression. The elevated mood is significant and is known as mania or hypomania and according to the latest pipe line report that’s where the industry is heading, hypo build mania  for the next few years, leave your meds at home and join the party intoxicated by potential, increased productivity and profit. Get out your calculator and start adding up the fees. But remember waves don’t go on for ever and it may be a long paddle out to the next wave. Enjoy it while you can. Happy New year.