If the CBD is dying, will rail save it?

A common cause
A lot of energy, analysis, and ideas have gone into preserving Central Business Districts round the world.  Sometimes this involves changing traffic conditions, restoring redundant quarters, creating public amenities, and changing planning rules.  It may mean trying to turn public transport round in the hope that we can deliver more commuters to inner city businesses.  Or creating major downtown entertainment facilities – stadia, convention centres, and the like.  Or both.

The quest for former glories may result in attempts to stem growth elsewhere to keep the CBD as we know it from dying.  Of course, if that simply discourages investment, or drives it away, the result is a poorer CBD.  The reduction in the net wealth of a city means less discretionary spending on those things that might actually work in the centre.

Whatever initiatives, saving the CBD will cost.  This is an area where we need to tread carefully: to know the beast we are trying to save, and why as well as how.

The myths of urban intensification
In an earlier posting I suggested three myths that misinform urban policy. 

• Agglomeration automatically increases growth.  This doesn’t appear to be the case for Auckland.  There is no silver bullet to boost the urban economy.  Lateral thinking will help, together with creativity, and an environment that welcomes rather than restricts development.  And let’s not forget that agglomeration carries with it costs which can drive investment – and skills – away.
• Higher density enhances firm productivity.  The evidence does not support policies that effectively undersupply business land and limit investment choices.  We need to get back to basics to make this a great place to invest in, and address in particular the quality of labour, land, and capital.
• Rebuilding the CBD is a key to the compact city. Is it?  If so - and I think there may be other, better reasons -- will trying to boost white collar commuting work? This is what I look at below.

Promoting the CBD
Promoting the CBD has been an international preoccupation for over 50 years.  As automobility increased after the war, international trade grew, and baby boomers supported a prosperous suburbia, the CBD was increasingly bypassed. 

An unlikely alliance of business and regulators attempted to reverse this.  The former were interested in preserving property prices, and dragged the latter along with them. 

The planners more recently took up the case in its own right, a plank in the new urbanist and sustainability agenda.  This relies in particular on promoting public transport in compact cities.  For this to work, employment has to be concentrated.  The CBD was where employment focused in the past.  Many planners believe it’s where it should refocus today. 

So how is Auckland’s CBD faring?
Does the future of the CBD really rest on its employment performance? 

Let’s look at Auckland's employment changes over the past decade, from 2000 to 2009.  I have used Statistics NZ’s Business Directory employment counts for comparisons.  I analysed what I call Central Auckland, which includes the Inner and Outer CBD.  [1]  What does it show us?

First, total employment in Central Auckland grew by 13%, the rest of the region by 19%.  Central Auckland accounted for 16% of regional employment in 2009 (down from 17% in 2000). 

Second, employment in Central Auckland fell 2.9% between 2007 and 2010, but only by 1.9% elsewhere.

Third, service employment (the white collar stuff) grew by 20.2% in Central Auckland but by 30.8% elsewhere in the region.  Central Auckland accounted for 26.5% of regional service jobs in 2000 but was down under 24% at the end of the decade.  These activities actually declined by 1.1% in central Auckland between 2007 and 2010, but grew by 3.2% in the rest of the region.

Fourth, retailing in Central Auckland grew by 7.5% but 21.2% elsewhere.  Central Auckland accounted for just 8% of the region’s total retail employment in 2009.

Fifth, hospitality also grew by 7.5% in Central Auckland, but it grew by 26% elsewhere.  Central Auckland still accounted for 26% of the region’s hospitality jobs in 2009, however.

What do we take from all this? 
So Central Auckland is no longer the powerhouse of employment growth in Auckland.  It has some specialties, of course.  But its traditional strength in white collar services is declining.  Its retail dominance is long gone.

More than that, it may just have turned a critical corner.  The Global Financial Crisis is by no means over and even if it is, we may not see a return to the buoyancy of the service sectors that sustained the CBD over recent decades.  Even public sector growth will to be much more constrained over the coming decade than it was over the one just gone.  

With improved communications, leaner operations will be looking for more cost effective sites.  Decentralisation and decamping may be a feature of a slimmer white collar sector in the future.

Health care and social services remain biggies in the CBD. They accounted for 43% of net new jobs there over the decade.  But how much more can they continue to grow in straitened fiscal times? 

Business services started  the decade well but unsurprisingly went backwards after 2006.  Financial services continued to hang in but with much reduced growth.  Anyway, they are growing faster elsewhere.

Professional and scientific services and computer systems have done well.  Let’s hope they hang in there.  They are important to our recovery, in more ways than one.

The creative industries, much touted by Richard Florida and others, and echoed in research commissioned by the old Auckland City Council, did okay.  The arts and recreation sector added 1,275 people over the decade.  Interestingly though, gambling accounted for much of this growth – with 840 more people employed in 2009 than in 2000.

And without strong growth in discretionary incomes across the region, gymnasia, arts, movies and movie making, gambling and other amusements are unlikely to be the stuff of serious growth in the foreseeable future.

Don’t bet on the office sector
So let’s not assume that office employment, the key to CBD growth over the past forty years, will be the driver over the next forty. 

But this is what the recent business case for a CBD rail loop assumes.  Much of the potential benefit is attributed to opportunities for premium office space expansion based on better commuter transport.  The case projects 30,000 new office-based jobs in the CBD by 2041 (Appendix K, Figure 21), despite the recent slowdown and the highly uncertain outlook for the medium-term.  What will all those white-collar people be doing to sustain the projected construction of all that new high rise – and high cost – office space?  Gambling?  Exercising?  Making movies?  Administering superannuation funds?

In any case, the international evidence used in the rail loop business case is based on ... guess what? The experience of large American cities over the past forty years.  I'm not sure what this tells us about how Auckland’s CBD will evolve over the next forty. 

Where to from here?
A healthy CBD is one where people want to be.  And as the structures of cities and regions change, so the reasons that they might be there change as well.  So preserving the CBD of the past – the centre of department stores and high rise offices, the heart of white collar employment, the home of the casino and multiplex – may not be practical, or possible. 

What we might hope for is the CBD to be the cultural and spiritual if not commercial heart of a strong city and region.  We can’t just give up on it.  There are huge expectations around the CBD and its waterfront in Auckland and elsewhere, and a willingness to commit resources, ideas, and energy to keeping it pumping. 

So what exactly will we be trying to achieve.  And how best might this energy and these resources be applied? 

I’m still thinking about it.  But preserving – or restoring – the past is only likely to be justified in terms of respecting our heritage, not in terms of shaping the future. Pumping more commuters into the CBD seems to be a high risk approach to an area undergoing another interesting if still largely unpredictable transformation.

 

[1]      For those interested, the following Census Area Units make up my version of Central Auckland: Harbourside, Auckland Central East and Auckland Central West .  Freemans Bay Newton, Grafton West and Grafton East make up the Outer CBD.  There are interesting differences between the Inner and Outer CBD which I may go into another time.

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