Commercial construction in Tauranga is experiencing unprecedented growth while the number of home builds has flattened off, according to a new economic report.

The latest Infometrics quarterly economic report provided by Priority One showed non-residential consents in the city were up 48 per cent compared with the same quarter last year. Nationwide, the increase was 10 per cent.

Of the $337 million of non-residential consents in the 12 months to September, $117m was for retail buildings, $82m for industrial spaces and $71m for offices.

The number of residential consents issues, however, dropped by 22 per cent - from 461 in the September 2017 quarter to 370 in the same period this year - which experts attributed to a stabilisation after a few record years.

Priority One projects manager Annie Hill said the unprecedented growth in Tauranga's business community reflected the ongoing confidence investors had in commercial property and of a more productive economy.

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"Commercial consents also tend to mean larger developments of a significantly higher value than residential consents."

Hill said the residential slow-down followed "record highs" over the past few years.

Nearly 1000 home builds plus 34 apartment or multi-unit developments were consented in the past year, including 87 in November alone, Hill said.

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Tauranga and the Western Bay of Plenty continued to be popular places to live and work, and the expansion of the retail sector was also creating hundreds of new jobs, she said.

Tauranga Chamber of Commerce chief Stan Gregec said the boom in commercial development was fuelled by a mix of earthquake strengthening, new builds and the renovation and repurposing of existing buildings and amenities.

Bayfair Shopping Centre and Tauranga Crossing would be huge flagship developments once complete.

"I think this gives the Tauranga CBD an opportunity to reinvent itself as a destination for high-end and boutique shopping, plus being more of a hub for corporate offices, as well as a precinct for hospitality and entertainment," he said.

"The CBD's point of difference will always stem from its central location and having an unrivalled position near the water."

Gregec put the slowing of residential builds down to people "waiting to see how issues like roading and public transport are resolved" before committing to builds.

Tauranga Crossing chief executive Steve Lewis said Tauranga was an attractive place for people to live and work and research showed the city's economy was capable of supporting more retailers.

New national and international brands were seeking mall space and existing retailers, such as Event Cinemas, were looking to expand.

"Tauranga is going through a boom period, and is the fastest-growing regional economy in New Zealand," he said.

"This economic growth is likely to remain strong for a period, and is a significant driver for the increased level of commercial building consents."

 Registered Master Builders Association Tauranga president Mike Bell. Photo / File
Registered Master Builders Association Tauranga president Mike Bell. Photo / File

Registered Master Builders Association Tauranga president Mike Bell was not concerned about the drop in residential consents, saying the data reflected a "levelling out" in residential builds across the city after a "frantic" start to the year.

"It will be interesting to see the data again in late January to early February when everyone comes off the Christmas holidays," he said.

Johnny Calley of the Registered Master Builders Association. Photo / File
Johnny Calley of the Registered Master Builders Association. Photo / File

Johnny Calley, of the Registered Master Builders Association and Calley Homes, said the drop in residential consents showed the market had stabilised.

The cost and availability of land and access to finance all contributed to the decrease.

Calley said he expected the recent slight adjustment to the LVR (loan to value ratio) would stimulate better residential building activity, especially with investors.

Siblings Robert and Andrea Watt will open the doors to their first Tauranga store The Source Bulk Foods this month. Photo / Supplied
Siblings Robert and Andrea Watt will open the doors to their first Tauranga store The Source Bulk Foods this month. Photo / Supplied

Opening shop doors in the Mount

Andrea Watt remembers making regular family trips as a young girl from Timaru to Mount Maunganui every Christmas.

Now she and her brother, Robert Watt, are opening a business in the beachside suburb they once holidayed in, visiting the campsite their grandparents ran at the base of Mauao.

"It means a lot to us, the Mount."

Their zero-waste wholefoods store, The Source Bulk Foods, is one of 20 new stores opening this month in stage one of Bayfair Shopping Centre's $115m redevelopment.

The family-owned business, brought to New Zealand from Australia in 2017, will open on Thursday and will be the third New Zealand store.

Andrea said Tauranga was a perfect location to open a business because of its location and community need for different healthy food options and interest in zero-waste brands.

"We can't wait to show the people of Tauranga what we're all about," she said.


Highlights for Tauranga City
Gross domestic product in Tauranga City was up 3.6% for the year to September 2018 compared with a year earlier. Growth was higher than in New Zealand (2.9%) and higher than in Bay of Plenty Region (3.5%).
GDP was $5620m in Tauranga City for the year to September 2018 (2010 prices).
Annual GDP growth in Tauranga City peaked at 7.5% in the year to December 2016.