The central business district is on life
support, with cities around the world struggling to spring back into life. From
New York to San Francisco, from Auckland to Melbourne, the CBD looks very
different since the global pandemic. There are many reasons for this shift,
including more remote work opportunities, less disposable income, and a growing
distrust of public spaces due to health concerns. While some cities are showing
new signs of life, politicians and city planners are struggling to address the
ongoing exodus. At the start of 2020, 21 urban business districts around the world housed 4.5 million workers in more than 100 million square metres of office space. Around 20% of all Fortune Global 500 corporations were based in the CBD, and inner-city cafes and restaurants were buzzing from a constant flow of workers, tourists, and visitors. Over the course of 2020, however, as lockdowns were continually announced, a huge percentage of this workforce moved over to remote working arrangements.
As vaccination rates grow and workers return to the office in 2021, city streets are slowly waking up from their long slumber. The speed of this process is concerning many, however, with most CBDs not reaching anything like pre-pandemic levels. According to Kastle Systems, based on data from 10 large US cities from May, offices were only back to 27% occupancy. While southern cities like Dallas and Houston were above 40%, occupancy rates in New York and San Francisco were closer to 15%. ; ;
The situation in Australia is much better but far from healthy, with occupancy rates in central Sydney and Melbourne only around 50%. According to data from the Property Council of Australia, Sydney occupancy rates reached 59% and Melbourne hit 41% based on April results. While still very low, these numbers have been rising for most of 2021, with occupancy in Sydney climbing from 50% the month before and numbers in Melbourne rising from 35%.
While Ken Morrison from the Property Council talks of “welcome progress” and a "big number of workers returning to these CBDs in recent months", he admits "there is clearly still a long way to go until our CBDs reach the levels of occupancy anticipated in the new normal”. These figures were recorded before the latest lockdowns, which will put another damper on the re-emergence of city life. New Zealand CBDs have performed well by comparison, with Auckland and Wellington only seeing a small decrease in worker movements. According to Colliers Research, the overall vacancy rate in the Auckland CBD increased from 4.7% to 8.8% in the year ending December 2020, with CBRE putting this figure higher at 12.4%.
Office worker movements are not the only way to measure inner-city life, however, with global cities also seeing fewer tourists and much less nightlife. Restaurants, cafes, and night clubs continue to struggle, as do tour operators, taxi drivers, and ride share providers. Despite these obvious challenges, the decline of old-style CBDs will present us with new opportunities. While the "business" portion of the CBD might be on life support for a while to come, the central neighbourhoods and hospitality districts that define the lifeblood of many inner-cities will continue to transform in new and unexpected ways.
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