Date: 30 August 2020
Source: The Guardian Australia
Author: Elias Visontay
Photograph: Loren Elliott/Reuters
Office buildings in Australian CBDs could be converted into residential living spaces, as a tanking commercial property market leads to a potential reversal of gentrification.
The prediction of drastically different city centres, made by property experts and architects, follows the Covid-19 shift in work habits that have forced employers to allow staff to work from home, with expectations the flexibility afforded to them as a result of coronavirus will remain in some capacity into the post-pandemic future.
Urban planning thinktanks believe that as businesses require less floor space and less commercial property is used, state and local governments will have to do more to draw people into the city centres in which they have already invested heavily.
By April, 42% of office real estate requirements in Sydney were on hold, and in July, mobile phone data collected for Sydney’s CBD showed foot traffic was down 52% on January. The decline was 65% in Melbourne’s CBD before their stage four lockdowns were introduced.
It has been forecast that Covid-19 working from home patterns will deliver a $10bn blow to the $142bn Sydney’s CBD was expected to generate in 2020, including a $3bn drop in productivity from an estimated loss of interactions between skilled workers who meet unexpectedly and collaborate.
While movement and financial figures from Sydney and Melbourne include varying degrees of community transmission, the Guardian understands similar, not yet released figures show movement data in Perth’s CBD – in one of the states least affected by distancing requirements – in August is about 50% of pre-pandemic numbers.
Tony McGough, a senior property lecturer at RMIT, says the figures from Perth, as well as cities overseas that have eased Covid-19 restrictions, show working habits are not likely to return to five days a week in an office.
“Suddenly an awful lot of work can be done from home and, once you get that idea in their heads, it stays.”
He believes workers alternating between one day at the office and one day from home will be a mainstay of future work culture – a trend that could almost halve demand for office space.
“The risks in property are increasing massively, particularly for office and retail,” McGough says. “The fall in foot traffic is not just bad for offices, but for the coffee shop all the workers went to, and all those businesses.
“There will be a flight to quality, so the very best buildings will hold up, but this will mean chunks of office areas, they might start looking at rezoning some of those to residential.”
He predicts retail and businesses aimed at workers and their habits before and after work, and during lunch breaks, will shift to suburban high streets. He also says “the raison d’etre will have to change” for large shopping centres, in cities and suburbs, to rely less on retail – as Australians have grown more comfortable with e-commerce during the pandemic.
However, McGough says it will take about two years for the physical landscape of a CBD to change, for construction of office buildings to halt from lack of demand and change the makeup of a city.
Mike Harris, an academic in urban architecture at the University of New South Wales, believes Covid-19 will have an enduring impact on work culture and CBDs.
However, he says working from home entirely goes against human nature, and points to predictions of a shift to home offices when the internet boomed that never eventuated. He also says technological constraints, including Australia’s internet capabilities, mean not all businesses can dissolve their premises.
Harris notes tech giant Atlassian’s recent announcement of their new headquarters in central Sydney as an example of what future office development will look like, as it dedicates more space for leisure and other uses.
He says the ease of access to CBDs, given transport systems are designed to move commuters to them each day, means governments will “want to contain the commercial core of the city”.
If office buildings aren’t fully occupied, authorities could aim to “bring the next wave of creatives and startups”, those traditionally pushed to cheaper parts of cities, into corporate spaces by using rent assistance.
“It could be a good opportunity for the reversal of gentrification patterns,” he says. “It’s about understanding diversity in a city is ultimately a good thing. If they don’t do more to fill the buildings, the economy loses from the businesses that close who relied on workers.”
While Harris thinks Australian cities are “quite far away from knocking down” office buildings as they are, future CBD buildings are likely to consider new working, and health-conscious, habits.
He points to how footpaths were expanded and more parks built as a result of New York’s cholera outbreak in the 19th century, and says a good test of whether similar moves could occur in Australia will be if a long-discussed plan to build a square opposite Sydney’s Town Hall eventuates.
“Government’s get freaked out by the idea of less buildings, as it’s such a visual sign of decline,” Harris says. “So it’s got to be done in a strategic way, so it actually draws people in as a public space.”
Gabriel Metcalf, the chief executive of the Committee for Sydney, says he is optimistic Sydney’s CBD will “come back better than ever, but it’s likely that it will have to evolve in some ways”.
“Office buildings may need to be retrofitted to serve more of a gathering and collaborating purpose instead of simply providing work space,” he says. “Shopping centres may need to shift even more to experience goods as opposed to things that can be bought online.
“The streets will need to support a higher quality of public life, with things like sidewalk cafes, instead of being so oriented to car traffic.”