Monday, 14 June 2021

The Death of Melbourne's CBD has been Greatly Exaggerated

Google any news article to do with Melbourne CBD in the last 12 months, and you'll find 95% of those articles pertain in some way to its prophesied demise.

There's no question that the CBD is going to be doing it tough for the forseeable future, but there's also no question in my mind that Melbourne will actually be back on a pre-pandemic trajectory over the medium term, provided enough sound policy to nudge it back in that direction.

Reasons why Melbourne CBD would naturally be expected to recover over the medium-term

1. It's Central to Potential

COVID has accelerated the public acceptance of the desirability of a 20 minute nighbourhood. The CBD is the geographic centre of the city, and all of its surrounding suburbs have been densifying markedly over the past decade. We have already seen COVID strengthen demand for medium density office and residential development in those areas, and this actualy bodes well for strong future demnd for development on the scale and density that is proposed for the Fishermans Bend and Arden- Macaulay redevelopment zones.

Melbourne CBD has really only in recent decades reaped the rewards of having been surrounded by acres of marshland to its south and west. The CBD will remain effectively part of the 20 minute neighbourhood for all these areas, as well as a densifying north, east, west Melbourne, Carlton, Flemington, Kensington, etc. I also believe tremendous potential exists for redeveloping the Dynon rail yards and later the remainder of Docklands, but we will discuss this in more detail at a later date.

2. It's Still the Geographic and Economic Heart

Critical Mass matters. In planning and in Economics. The CBD is now home to something in the order of 80,000 residents. Many of those were international students, but regardless, we keep forgetting that we broke the "doughnut city" model in the 1990s, before the international students arrived en masse. The CBD IS the 20 minute neighbourhood to tens of thousands of people now, and while the projected pre-COVID growth for CBD high rise apartments will almost certainly take decades to recover, this now presents further opportunities, as we will discuss shortly.

In spite of the trend towards work from home, we've already seen other Australian CBD occupancy rates rise above 80%. So you'd have to say work from home is actually ultimately going to impact by something like that quntum. I also believe that firms are going to cruch the productivity numbers on work from home at some point, and we will actully see pressure being placed on employees to minimise work from home over the medium term. 

There seems to be a curious inversion of the power relationship right now evident in the comments section of all these articles that suggests people are convinced they are actually going to be able to dictate the future extent of work from home to their employers. I think this remains to be seen.

The question of economic critical mass cannot be overstated, either. Regardless of how many companies downsize or leave the CBD, it will still be by far the largest employment geography, with all the attendant economic activity that necessarily comes with that. Moomba will never be moved to Chadstone, for instance.

3. The Projections Don't Map to Current Evidence

The CBD over the medium term WILL recover to 80%+ occupancy, just like Brisbane, Adelaide and Perth, and overall economic growth has almost already rebounded to pre-COVID levels.

The borders will eventually be opened again, and the internatioinal students will return, but it remins to be seen in what quantum.

Immigration will also return, population growth will resume and once more accelerate that economic growth, immigrants will also tend to be overall more accepting of higher density living arrangements, and will tend overall to settle in Melbourne and Sydney.

4. We've Seen it All Before

The effects of the influenza pandemic of 19 were not dissimilar upon CBD activity, yet history seems to suggest learned pandemic behaviours are quickly shed. 

Especially given the growth trends were so strong pre-COVID, I for one expect things to gravitate back towards the old trends faster than most commentators assume, notwithstanding the clear and ongoing trend towards work from home means it won't necessarily return to quite the same hectic levels, which is frankly going to be better for maintaining the CBD's long-run amenity, regardless.

5. Pre-COVID Growth was Spectacular

The CBD was already under severe growth pressure pre-COVID, the Property Council were screaming at the Planning Minister that his new CBD controls had left only a hndful of developable sites in the CBD.

So, I think all of the above suggests we are going to see levels of activity within the Melbourne CBD back at pre-pandemic levels naturally over the medium term.

But I also think it suggests some specific policy directions to ensure that we get there within the shortest possible timeframe. Announcing the ...

Wombat Melbourne Fightback Plan ...

Pause and Re-Load

We should declare the CBD now essentially FULL in terms of the scale of further development allowable. Melburnians love their CBD, but the consensus was clear that most people felt the scale of development seen since the late 2000s was threatening the character of what they loved. 

Rendering the pause on lrge-scale development semi-permanent is thus critical to the maintenance of "Brand CBD", especially considering demand for development on that scale - both office and residential is at best set for an approximate decade-long pause. Even more especially considering we have such ample tracts of development land now becoming available at the CBD fringe.

We should seize this opportunity to say "the CBD is at the limits of its capability to retain its heritage character, and its urban amenity in terms of sunlight ever hitting the footpath". Our task now is to get the fabric that we are dealt with here back to its earlier state of vibrancy. That will take some time, but simply adding supply to the mix seems like the worst possible strategy. 

There are large projected vacancies in the B, C and D grade office stocks, opportunities will exist to refurbish those buildings (which in general tend to contribute least to the existing urban fabric anyway) by way of maintaining supply.

Further demand, and indeed the demand for residential and office development more at medium rather than higher density within a well planned neighbourhood can then be taken up by Fishermans Bend, e-gate, Arden-Macaulay and potentially Dynon and Docklands 2. These areas would then become part of a "greater CBD" and activity from the new development areas would naturally contribute to revitalising the neighbouring CBD/Docklands areas, and indeed giving Docklands the geograpic focus it has always been lacking.

New Social Housing Focus

The State Government is already buying up CBD apartment stock for social housing. There is no better location to place people with social housing needs than the CBD, from where they have access to virtully the entire metropolitan employment market without the need to own a car. Social housing tenants are another sector that are going to be more accepting of high density living arangements, and many would view the grade of housing stock on offer in the CBD as vastly superior to the social housing norm. I think the opportunities to actually solve some of the city's more critical housing issues is one of the silver linings hidden in the pandemic cloud.

A lot of artists and creative industries have been pushed out of the CBD in recent years through gentrification, and the opportunity exists to use the glut of both apartments and retail spaces to re-instate the CBD's role as a space where adventurous creative industries can thrive and put their product before an audience on a cost-effective basis, whilst at the same time enhancing those points of difference for CBD retail that Chadstone will never be able to compete with.

Retail Revival

For retail, I'd suggest we need to stop all these people out there rubbishing the CBD in the comments section of all these articles. The CBD needs to be THE place to shop again, even if folks do it late night or weekends rather than during their lunchtimes.

Melbourne has always struggled to make late night shopping happen systemically, but it's the point of difference relative to Chadstone (which can't effectively cater to anyone in the western suburbs), only the Melbourne CBD could transform itself into more of a late night or even 24 hour shopping destination for the whole city. The Council should think about policies that can push us more in this direction.

The opportunity also exists to seize the initiative to create a proper pedestrian retail environment the entire length of Elizabeth Street, in line with previous Wombat plans to create "the Asia-Pacific's largest outdoor mall". I think this emphasis wants accelerating. I think a campaign that emphasises not just that shopping the CBD is ten times more fun and a hundred times more soulful than shopping Chadstone, but that part of the attrction is that everything is OUTDOORS.

How many times have you seen"The Bourke Street Mall" come up as an infection site? Versus "Suburban indoor shopping centre food court", etc? Melbourne should be selling the OUTDOOR nature of its shopping experience, making the most of the MARKET as part of the overall experience, turn the tables on this damn virus and say "Melbourne CBD is the most COVID-safe major shopping centre available to you!"

So how about we put a pause on all the things that we felt were hampering Melbourne before anyway. How about we accept acceerating the push to a 20 minute city will be one of the pandemic's legacies, and we strive to make Melbourne CBD a part of that strategy for as many people as possible? How about we give our transport network the kind of off-peak service frequencies that mean people can turn up and go to the CBD within 20 minutes from Fisherman's Bend, Southbank, Docklands, Flemington, Kensington, Carlton, Nth Melbourne, Parkville, St Kilda Rd, East Melbourne, West Melbourne, etc. but we also from new proximate activity centres - Footscray, Moonee Ponds, Abbotsford, Collingwood, Cremorne, Burnley.

But I tell you what, you CANNOT do that at Fisherman's Bend, without a plan to get both heavy rail and additional tram routes in there via Southbank in the first case and Docklands the latter.

Regular readers will be unsurprised to learn a plan exists for all this too. But that can wait for another day ...