The effect covid has had on CBDs around the country cannot be understated, as Australia approached 2 years since the lockdowns started. In those 2 years, the country has seen a move to working from home and a rise in communication technologies to assist in this transition.
Now as Sydney and Melbourne reopen after a long delta lockdown, the question of what these cities will look like post-pandemic is being asked.
Simon Kuestenmacher, a demographer and geographer with The Demographics Group believes that the work from home trend will continue, however, it won’t be as high as it was during the pandemic.
Liz Allen ANU demographer believes that the rush to the regions won’t last, as families realise that opportunities are limited.
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from AFR 22.10.21
“We’re expecting to welcome excited Melburnians back,” said Tim Botterill, a director of HQ Group, which owns the floating bar. “We will miss the interstate and international tourists. However we are looking forward to strong support from Melburnians once again.”
Melbourne’s post-vaccination reopening, like Sydney’s almost two weeks earlier, marks the start of a new phase for the country’s two largest cities and a real-time experiment in what “normal” life could look like.
It’s a pivotal moment for residents of the world’s-most-liveable-turned-most locked-down city but, as Harvard University economist and cities thinker Edward Glaeser told a Committee for Sydney audience earlier this month, cities have been picking up and resetting themselves from major health crises ever since the Plague of Athens in 430 BC.
The centre of efficiency
This is because cities offer the most efficient way to get things done and grow. Ideas and knowledge spread faster among dense populations; they are the best way to encourage innovation and efficiency. And cities, which have always offered the best opportunity for social and economic advancement, constantly draw in a new pool of ambitious and hopeful workers.
“Cities and disease are old companions,” says Glaeser, who argues that since the nineteenth century, pandemics – and the need to protect workers from them – have shaped cities in more deliberate ways. A cholera outbreak in New York City in 1832, for example, led to wide-scale public investment in water and sewerage infrastructure, he says.
Urban Australia’s experience shows that, despite conjecture and warnings sparked by the pandemic, cities are not going into decline or about to fail.
Innovation on the cards
Other changes will come, too. One business to see an opportunity coming out of the pandemic is PropPay, a start-up that offers commercial property landlords up to three years’ rent in advance, to give them cash to reposition their properties, update them, or just to meet other cashflow demands.
“CBDs in general have been completely changed during the COVID-19 period,“ PropPay chief executive Tim Rahn says. “This is allowing landlords to get some flexibility and certainty on the income of their rent.” So far, the company has completed about 18 deals with SME landlord partners.
The business, founded by Sydney developer John Virgona and former PwC partner Ian Clark, is eyeing a $50 million raising next year to allow it to finance larger deals.
“It’s going to be interesting to see who the winners and losers [of the pandemic] are,” Rahn says. “But at the same time, the ability to go back into the market and attract the tenant you want, for your commercial premises, whether with our product or any other product … is front of mind right now.”
When it comes to white-collar work, single and younger workers may be keen to return to the office, a place of on-site training and a key part of their social life. But those with carer or other responsibilities, or people with underlying health conditions, are more likely to make use of increased opportunities to keep working from home.
Adjustment times will also vary by city, Kuestenmacher says.
“The time required to go back to normal, if you will – if this will happens at all – differs vastly between different cities based on how long you were in lockdown,” he says.
By next March, Melbourne office workers will have had almost two full years of working from home. “That is plenty of time to build ingrained habits and ingrained preferences,” he says.
“By March-April next year – I would say COVID-19 is still a thing but not a big danger and Melbourne will have a much lower rate than Sydney. We’re talking 10 percentage points or thereabouts, I would guess.”
He cites the example of Dropbox, which last year said it would no longer have offices with desks for staff to work at and would not allow a hybrid model of working from both home and office. Instead, all staff would do solo tasks remotely and would only come on to company premises, rechristened Dropbox Studios, for collaborative tasks.
Big versus small
Glaeser says there will be some overall reduction in demand for CBD office space. The world’s bigger and more dynamic cities won’t suffer from this, but smaller ones will, he warns.
“The impact of a pandemic on reduction for office space, which I believe will happen from the rise of hybrid work, that will show up primarily in expensive markets, including Sydney, in terms of lower prices, not in terms of vacancies,” he says.
“Even if, in a place like New York or San Francisco, prices drop by 20 per cent, those prices are still plenty high enough for people to still occupy them.
“In contrast, in places like Grand Rapids [Michigan, 200,000 people], or Detroit [Michigan, 675,000 people] or Columbus [Ohio, 879,900 people], you could have a really substantial drop in prices that could actually lead to vacancies and then those vacancies could spill over throughout the overall economy.”
Back on the Yarra, in the lee of Melbourne’s Flinders Street Station, HQ Group is making adjustments for a changed trading environment.
Arbory Afloat, which in previous seasons has closed at the end of summer, will extend its season, both as a way of increasing its patronage, but also as a way of reinforcing other efforts to open up the city, Botterill says.
“We intend to operate until the Queen’s Birthday long weekend in June to support Melbourne’s Rising Festival,” he says.