Wellington's big construction firms running out of landmark projects
Saturday, 5 October 2024
Wellington’s building boom ended with a jolt last year, sparking fears among big contractors about what’s on the horizon as a number of multimillion-dollar projects near completion.
The city’s construction market looks very different to what it did two years ago when things were going “gangbusters”, according to Aoraki Construction director Chris Goldsbury.
At the time there was more work than the industry could handle, but sharply higher interest rates meant the number of large-scale projects has declined.
His own firm would have had several projects on around Wellington in the $20m to $40m range.
“Sometime around this time last year things sort of just came to a very abrupt falling off a cliff ‒ almost directly as a result of interest rates. Suddenly things just didn't stack up any more and there was significantly less volume of work,” Goldsbury says.
Social housing agency Kāinga Ora has also cancelled many of its Wellington developments, which he says has had a significant impact on the construction market.
The firm has had to adapt and refocus on smaller projects.
LT McGuinness is the capital’s biggest construction firm and has several significant and complex projects under way in the central city ‒ some replacing buildings damaged beyond repair by the 7.8 magnitude earthquake in 2016.
“There are still a lot of buildings that still require strengthening work, particularly those at the mid to lower price brackets,” director Dan McGuinness says.
However, the Government is reviewing the earthquake-prone building system and has extended all non-lapsed strengthening remediation deadlines by four years ‒ with a potential further extension of two years ‒ to alleviate financial pressures on building owners and provide some clarity while the review takes place.
McGuinness is pleased with how its major projects are progressing, including the Heke Rua Archives building, 61 Molesworth St, Victoria University of Wellington’s Living Pā and Te Matapihi and the central library.
Heke Rua Archives
LT McGuinness began construction of the state of the art building on the corner of Mulgrave and Aitken streets in early 2022, and will house more than 7 million important documents.
There are 300 people working on the highly complex building, which is on schedule to open early next year and will be one of the country’s most earthquake resilient, sitting on the largest base isolators in New Zealand and allow the building to move up 1.3 metres during a quake.
With the façade all but complete, and some of main services up-and-running, the public entrance and landscaping work is underway. In the lead-up to February the street works will be completed, McGuinness says.
Archives is being built on the site previously occupied by Freyberg House, commonly known as Defence House, which was damaged in the earthquake and demolished in 2018, just 11 years after being officially opened.
The $290 million national facility will house the country’s rapidly-growing archival collections.
The public would have greater access to view the wide range of taonga held by Archives, chief archivist Stephen Clarke said at the time the building was commissioned.
The building is due to open in 2024 with about 19,300m² of lettable area, and a minimum 4 Green Star rating and contains 6500 tonnes of steel.
The building features quarantine and secure loading areas, state-of-the-art shelving and repositories, specialist audiovisual and film suites, conservation and digitisation facilities, and seminar and meeting rooms.
Its design has also been created with a te ao Māori world view. The building sits on part of the original Pipitea Pā whenua.
A bridge will link the building to the National Library , creating a new public record and documentary heritage campus that includes Archives NZ, National Library and Ngā Taonga Sound and Vision.
Archives NZ will take a 25-year lease on the new building, with multiple options to extend.
61 Molesworth St
The Ministry of Foreign Affairs and Trade’s new home is also taking shape on Molesworth St in the hands of LT McGuinness.
The 14-storey “environmentally focused” office building neighbours Wellington Cathedral of St Paul. The site served as a car park after the original building also fell victim to the earthquake.
The structural design of the building incorporates fluid viscous dampers, which help reduce the forces of an earthquake on the building’s structure.
The large concrete core of the building has been completed and floors will be added over the next few months. A pleated glass facade design is also already taking shape, McGuinness says.
Victoria University Living Pā
Victoria University of Wellington’s Living Pā on Kelburn Parade was originally due to be completed last year.
Costs have overrun by $26m from the original budgeted $35m, and in 2022 jumped to $52m. The project is now slated to be completed by the end of this year at a cost of $61m.
Designed to be a sustainable living building, the three-storey pā is being built with minimal use of concrete and steel.
It will have a glazed facade, engineered timber cladding, a solar array on the roof and a closed loop water system. The specifications require it to generate all of its own energy, have its own water systems, be entirely carbon neutral and have used non-toxic materials.
Once completed it will be home to the university’s Te Kawa a Māui (school of Māori Studies).
Te Matapihi, Wellington’s central library
Te Matapihi, Wellington’s central library is undergoing a full re-strengthening and refurbishment after it was found to be earthquake prone in 2019 and immediately closed.
Wellington mayor at the time, Justin Lester, said the library was 'the living room of the city' and it was a very difficult decision to close the facility. About 3000 people, including up to 500 children, visited the library each day.
An engineering assessment found there were 'specific structural concerns' with the library's floor seatings.
LT McGuinness describes it as a “significant project that requires installing steel braced frames into the existing structure as well as installing base isolators for the buildings’ strength and resilience.”
The entire ground floor has been rebuilt while also keeping the whole structure safe for work being done on other parts of the building over the past 12 months.
“This has involved the formation of new concrete beams and slabs, and the addition of 49 new piles and foundations. It is progressing on time, and on budget ahead of its 2026 opening,” he company says.
Wellington Town Hall
Naylor Love is the contractor in charge of the troubled Wellington Town Hall refurbishment project.
The project has become increasingly controversial after Wellington City Council voted to strengthen the building in 2013 for an expected cost of $43.7m after it was declared earthquake prone four years earlier.
Since then a series of cost blow outs mean the total could be as much as $329m and the opening pushed out to 2027.
The Dunedin-based company is also building the new Southern Cross hospital and car park building in Newtown, Wellington City Mission Whakamaru, and a staged refurbishing of the James Cook Hotel.
Aoraki Construction director Chris Goldsbury:
Goldsbury says Aoraki Construction has adapted to the changing market by focusing on smaller commercial projects, such as the Armstrong new car workshop and refurbishing the dealership’s Porsche show room, as well smaller commercial and housing developments.
Other projects include a fit-out for education provider Te Wānanga o Aotearoa’s Kent Terrace campus, and another facility Porirua. It has also picked up a “pretty cool job for Blue Bridge on board one of its ferries”. Details are under wraps, but it involves “customer experience” he says.
The company is planning to build its own 12-unit apartment development in Mt Cook and there are still a large number of earthquake prone buildings in the city that will need to be remedied, or on which insurance has been paid out, but work has not started, he said.
The end of the building boom also means workers are no longer in short supply.
“There's more availability of skilled labour, so we can get better people than we would have a couple years ago,” Goldsbury says.
“But it's harder to secure projects. There's just simply less work out there.“
Aoraki has 30 core staff including project managers, site managers, quantity surveyors and a small crew on the tools. Additional labour is brought in from suppliers as needed.
“Three or four months ago, I would have been a little bit more down on the doldrums but at the moment there's lots of things on the radar that are really exciting projects that are coming up for sometime next year.“ That Includes appartment work, which is beginning to pick up again.
Two hotels are planned in the city, Wellington City Council has a lot of housing upgrade work, and there will be more school projects. There is lots more work on the horizon that has previously been stalled, Goldsbury says.
Williams Corporation managing director Matthew Horncastle:
Christchurch-based Williams Corporation is one of the largest builders of high density housing in the Wellington region, with about 45 finished townhouses across seven projects.
Managing director Matthew Horncastle says construction on a new development is about to start in Lower Hutt after a pause while the company assessed the market.
There are signs prices and market activity is increasing with transaction volumes beginning to improve, Horncastle says. “We have now actively gone back into buying.”
While the company has mostly focused on the Hutt Valley, it is looking to move into other parts of the region, including Porirua and Kapiti, and is “actively seeking” property in central Wellington.
“But Wellington is a difficult market. The councils are hard work, the utility companies are hard work and the trade base is more difficult than in the other large cities,” Horncastle says.
The region has a smaller workforce than Christchurch or Auckland, “and you have to pay a premium”.
At the peak of the market Williams Corporation was a large business with 1300 dwellings in progress nationwide, worth about $1 billion, compared to about 440 houses under construction now worth about $330 million.