Can the CBD survive Covid?
While many city businesses were hit hard, others evolved successfully.
They have borne the brunt of the work-from-home revolution. They are (or were) the glittering centrepieces of each state and territory’s economy. They are Australia’s premier central business districts, which have been stilled, or at the very least quietened, by the effects of Covid.
The question is: can our CBDs recover their role as pre-eminent workforce hubs for the Australian economy?
The 2021 census offers insight into the effects of the Covid-19 pandemic on CBD activity. We have created maps covering each state’s CBDs and surrounding suburbs to a radius of 3km. This allows a comparison of key data between consistently defined CBD zones.
Inner-city population densities rise as Australian cities expand. The 2021 census reveals that Sydney’s 3km zone contains 209,000 local residents; Melbourne follows with 164,000; Brisbane is next with 149,000. Perth’s inner city contains only 111,000 residents; it is a low-density city relative to its east coast counterparts.
The central parts of our major cities might have lost residents – foreign students are counted in these figures – across the 2021 financial year but overall resident numbers were well up on the 2016 census.
Brisbane added 37,000 net extra residents and 19,000 net extra households across the five years to last year; these figures are triple the number added in central Melbourne and double the number added in central Sydney across the same time frame. It’s almost as if Brisbane was catching up in the broader Manhattanisation of central parts of Australia’s biggest and most global cities.
The number of jobs in each of these 3km zones was last published after the 2016 census; 2021 figures will be released on October 12. This will be a day of reckoning for Australia’s CBDs, for the latest figures will reveal the impact of Covid on the greatest job reservoirs on the continent.
At the 2016 census the Sydney CBD and its attendant 3km inner-city zone were home to 526,000 jobs, up 97,000 or 23 per cent over the previous five years. This suggests that the 2021 job figure for central Sydney should be around 630,000 jobs.
The same geographic zones around eight state and territory CBDs collectively supported 1.8 million jobs in 2016; this figure should be around the two million mark by 2021 or 15 per cent of the Australian workforce (and probably responsible for about 20 per cent of Australia’s gross domestic product). This is why CBDs, and their associated inner-city employment, are so important.
In one sense it could be argued that Australia’s leading CBDs are in rude health. During the five years to 2021 local populations increased, spectacularly so in Brisbane and also to some extent in Canberra; and so did the number of households, possibly reflecting our warm embrace of the inner city’s apartmentia.
But the advent of the WFH mandate drained all CBDs of the frisson that gave these places their undeniable spark and sparkle. The proportion of the Australian workforce working from home had never exceeded 5 per cent (in cities) across five censuses between 1996 and 2016.
Various surveys conducted during the peak of the lockdowns suggested that perhaps up to half the workforce was working from home. The 2021 WFH proportion, to be released in October, will confirm the extent to which life has been siphoned from sizzling CBDs to sedate suburban Zoom-rooms. I think this proportion will average something like 15 per cent (if not more) across the major capitals.
Every single-percentage-point net uplift in the proportion of the workforce working from home effectively takes 130,000 workers out of the daily commute. A 10-percentage-point uplift means 1.3 million workers no longer commuting daily to CBD and other workplace destinations. An uplift in the proportion of workers working from home of this magnitude, as a permanent arrangement, is revolutionary; it would transform the narrative of everyday life in Australia’s biggest cities.
But there is something that is not quite right about this end-of-CBD-days scenario. Another somewhat under appreciated (in my view) dataset published annually by the Australian Bureau of Statistics tells a different story.
Business count measures the number of businesses (ABNs) operating in Australia each financial year. This data is available by geography (so we can match up with the CBD-plus-3km zones) and by employment size.
I have assembled a dataset showing the number of small businesses (employing one to four workers) operating in the central parts of our largest cities in June last year (two months before the 2021 census).
By comparing business count figures for June 2019 with June last year it is possible to measure the impact of the pandemic on small businesses (for example, sandwich bars, dry cleaners and so on) operating in the centre of Australia’s capital cities. Surely such an analysis will expose the extent of Covid’s CBD business carnage? Not so.
The evidence is that across the two years to June 2021 the number of small businesses operating in the CBD-plus-3km zone increased from 52,000 to 59,000, which is a net increase of 14 per cent across 24 months (and which includes 15 months of pandemic).
If the pandemic and its WFH mandate did wreak havoc on many CBD businesses – as I am sure it did – then, by the evidence of the figures cited, other small businesses must have flourished in more or less the same geographic area across the same time frame.
Bear in mind that the business count database is not a survey, it is not a census; it is sourced from a regulatory requirement to register an ABN to operate a business. If anything, business count data is more reliable than the self-enumerating five-yearly census.
And so what does this information tell us about the impact of the pandemic on our once-glittering CBDs?
There can be no doubt that the advent of work from home drained the CBD and the inner city of workers and of street-level hustle and bustle. Indeed WFH has surely affected many CBD-based businesses, some fatally.
But the blunt fact is that others have evolved. This dataset shows, in my view, the resilience of the Australian business community; it reflects an irrepressible confidence in the future – even when prospects seem dire – to launch a new business and to take on employees. And yet our CBDs remain subdued if not stilled.
The new businesses evident in business count may not be sandwich bars but rather consultancies, advisory businesses, the kinds of small businesses that may be registered in the city centre but that can be managed from home. Plus, sandwich-bar opportunities are now more likely to be positioned in suburban hubs enlivened by more workers working from or near home.
This goes to my fundamental point about the pandemic. This was not a Depression, or a world war, but it has had the same galvanising effect on the Australian people for two-plus years.
As a consequence Covid has changed consumer behaviour; it has created net new businesses; it hasn’t killed the CBD and the inner city but it has forced a major rethink on how and where Australians deliver workplace value.
The logic of the daily commute to the city centre was never seriously questioned before the pandemic; it is being questioned now and it is leading to a bold reimagining of how the city operates.
In the brave new world of the post-Covid era the CBD will surely remain the city’s pre-eminent job and business hub. But other suburban and perhaps even some regional hubs will emerge (possibly in lifestyle zones).
The pandemic has unleashed yet another iteration of the Australian pursuit of lifestyle where soulless commuting time is reclaimed, and is repurposed, by workers empowered by a skills shortage and the era’s new tech.
The CBD survives. It is still the nation’s pre-eminent business and job generator even if more of its registered businesses can be done from the family home. It may evolve further as a place where workers gather to celebrate wins, to learn new software, to undergo HR training, to hear corporate insights and announcements, to collaborate with colleagues.
In some respects extricating the dreary concentration aspects of CBD-based work to the home – or to the suburban work hub – leaves the CBD to evolve as a kind of theatre, a campus, a crucible of ideas, of learning and of energy. Now that’s the kind of place that inspires an semi-regular visit that is a far more pleasant experience than a daily commute.
Bernard Salt is executive director of The Demographics Group; research and data by Hari Hara Priya Kannan.
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