Dreaming a new city: Optimistic for Christchurch long term, pessimistic for short term

Dr Eric Crampton
The National Business Review
27 February, 2015

When Harvard economist Ed Glaeser delivered a public lecture on urban economics in Christchurch in 2013, hosted by Canterbury’s Department of Economics and Finance, he was asked whether Christchurch would really recover.

The question wasn’t crazy. Downtown was a wasteland of army cordons and buildings both demolished and yet-to-be-demolished, and the suburban recovery was just getting going. Glaeser’s answer was that the city would recover because, ultimately, cities aren’t buildings, they’re people. Christchurch’s human capital would form the basis for its recovery.

That required that people would stay.

Christchurch had a reasonable economic basis before the earthquakes. The city was, and is, the main service and manufacturing centre for Canterbury region and the South Island more broadly.

Sure, downtown was more spread out than suited some people’s aesthetic sensibilities but it generally worked. Because downtown included a mix of older, more run-down buildings, and newer office and apartment towers, it could offer a healthy mix of both upscale and lower rent amenities, from high-end retail to used book shops, with plenty of interesting nooks to explore in the lanes south of Lichfield.

The earthquakes wrecked downtown but, because much of the city worked to provide goods and services to the broader region, firms were tied to the Christchurch area.

For example, the hospitals and healthcare services employed more than 20,000 workers before the earthquakes and provided specialist services not just for Christchurch but also for much of the South Island. The hospital was not about to move out of Christchurch, so related services needed to stay close by.

Other industries tied to servicing the broader region had more locational flexibility within the greater Christchurch region. Because downtown quickly proved too hard to deal with, mostly thanks to the succession of lengthy central planning processes rightly excoriated in last week’s column by Rodney Hide, firms that had made temporary arrangements in catch-as-can facilities on the edges of town in the immediate aftermath of the quakes locked in longer-term leases outside the former downtown.

Consequently, now that commercial space is starting to become available downtown, four years after the earthquakes, developments are having a hard time finding tenants. The world did not stop just because the grey legions froze downtown until they finalised their perfect plans. Business moved on: to Victoria St, to Lincoln Rd, to new industrial parks by the airport and to innumerate small sites distributed around town.

Residents moved on as well. Building consenting being too difficult in Christchurch after the earthquakes, neighbouring Waimakiriri and Selwyn Councils picked up the slack. From the 2006 to the 2013 census, Christchurch lost just over 2000 residents or about 1% of its population. Waimakiriri grew by about 6500, or by close to 20%; Selwyn grew by 8700 – more than a third.

We can be very very grateful that the government’s fetish for supersized councils only amalgamated Christchurch with Banks Peninsula and not also with Waimakiriri and Selwyn. The greater Christchurch region generally kept its people, even if Christchurch City proper lost rather a few. The region will recover but it will look very different.

Labour’s 2014 Ilam candidate, James Dann, blogged recently that while the planners envisioned a compact and vibrant downtown core, planner incompetence will instead have achieved a “Turbo Timaru or a Hefty Hamilton.”

I’m a bit less pessimistic, at least for the longer term.

The government rightly took a lot of criticism for its initial attempts to artificially restrict downtown land supply to force a compact city form and encourage higher-valued development. The planners here exhibited basic cargo-cult thinking: because successful cities have high downtown property prices, they thought they could make Christchurch successful by forcing prices to be high. Well, that doesn’t work: high prices in successful cities reflect that people get a lot of value from being located in great downtowns, not the other way around.

In the longer term, because so much has moved on to the suburbs and to neighbouring districts, downtown land prices will have to drop. When that happens, developers will be able to bring to market properties with rental rates that could draw in tenants – if the planners don’t mandate that everything be plated in gold. Downtown will then come back but as part of a polycentric city.

This too should not be overly lamented. While I really love the tight downtown core in my new home, Wellington, it is risky. Faultlines can open unexpectedly and in unanticipated locations. Wellington really cannot have multiple downtown cores because of geography but Christchurch can build in resilience against future events by having lots of centres of economic activity. And, fortunately, while the economic literature points strongly to the benefits of urban agglomeration and of having lots of people in a city, it is far from clear that those benefits require having a single dense centre.

Fortunately, Christchurch City Council now seems rather more competent than its predecessor. That competence will be needed: the council will have to get a strong handle on its overall cost structures or risk its tax rates encouraging even greater flight to Selwyn and Waimakiriri. I’m a longer-term optimist for Christchurch. In the short term? Well, I’m happy to be in Wellington.

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