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.