What’s happening to central city services?

Questioning the future of the CBD
In an earlier posting I speculated about the future of white collar employment. This raised the question of what confidence we might have in service sector growth underpinning the future of the CBD, and incidentally how risky is investment – public and private – based on assuming that it will. 

This was construed in the comments as “giving up on the CBD” and a criticism of the proposed $2bn plus central rail link (CRL).   Well, I haven’t given up on the CBD, but I do differ in my analysis and prognosis from people who believe that a combination of coercive plans and think big projects will do the trick (see, for example, Hey, City Planners,  Remaking the CBD and Central City Dreaming). 

But the questions raised certainly go to the heart of the “business” case for the CRL.  In this blog I dig a little deeper into changes in the white collar sectors in the CBD to see if we can cast more light on the subject.

Projecting even more of more of the same
I have looked at service employment in the CBD and the rest of Auckland from February 2000 to February 2011 using Statistics New Zealand Business Statistics job count data (which does not distinguish between full- and part-time jobs).

The City Council’s economic update on the CRL projected central city employment to jump by two thirds, or 60,000 jobs, over 30 years, or 20,000 jobs a decade.  Now that’s real optimism in light of growth of under 12,000  from 2000 to 2011, and I don't see any underlying analysis supporting it.

The risk of depending on white collar growth
But this is only one of my concerns.  Changes in white collar employment raise other, more fundamental issues around the future of the urban area and especially the CBD.

White collar services (omitting hospitality and retailing for this analysis) accounted for virtually all the CBD job growth and rose from 71% in 2000 to 75% of employment there in 2011.  Commercial services accounted for two thirds of this.  So what happens in the service sector seems petty critical to the future shape of our CBD especially is we hope to counter a long-term tendency for work to decentralise (i.e., to grow faster outside the CBD than inside).

Decentralisation - international examples
A quick review of international examples suggests that greater contracting of public service delivery favours deconcentration (e.g. Washington DC); that dispersal to suburban and town-based offices contributes to decentralisation (e.g., Dublin), but that there may be a simultaneous decentralisation of some services and concentration of others (e.g., Paris).  

This is quite apart from the increasing international mobility of white collar jobs, and potential changes in functional interdependence and the need for clusters of centralised specialist services as a result of the deskilling traditional specialist occupations.

So what’s been happening in Auckland?
The 11,800 new white collar jobs in the CBD in 2011 represented 19% of Auckland’s total growth in those sectors.   Because they collectively grew faster elsewhere in Auckland (42%), though , the CBD’s share was down from 22% at the beginning of the decade.  

This tendency to decentralise varied by sector.  In Chart 1 the bars denote absolute gains (or losses) of jobs (left axis) and the points show the rates of change (right axis).  The CBD gained employment share in the sectors on the left hand side of the chart (centralising) and lost share in those on the right (decentralising). 

Chart 1: Changing Shares in White Collar Employment, the CBD and rest of Auckland, 2000-2011

                                              
Some sectors centralising
Centralisation increased in the specialised but small information and media and arts and recreation sectors.  The bigger finance and insurance sector also continued to focus on the CBD where 51% of the city’s employment in this sector is now located .  There was a slight increase in the CBD share of Auckland’s total education employment, although 87% is still located elsewhere.

While the others decentralise
But what about the fast growing – and highly significant – professional, scientific, and technical service sector?  Over a third of employees were in the CBD in 2000, but this was down to 27% in 2011.  A gain of 3,550 CBD jobs was dwarfed by 20,800 new jobs elsewhere.

And health care, medical and social services were clearly driven by suburban investment and demand.

In fact, 50% of white collar employment in the CBD in 2011 was in sectors which had grown faster outside it than in; not an especially strong foundation for projections that require annual employment gains in the area to almost double over the next three decades.

Recession can change these spatial patterns, of course, if lower order services and services directed towards individuals and households bear the brunt of a slowdown.  So we could see some re-concentration of services in the CBD in the next year or two, but it’s unlikely to be driven by high growth rates.

The CBD – a centre of specialisation?
Digging a bit deeper confirms the more specialised nature of CBD services. In the education sector  45% of tertiary jobs are located there.  This share didn’t change over the period, but the number of CBD jobs was still up by a solid 4,200 (47%).  Community and adult education jobs were up by 1,600. 

Chart 2: The Changing Share of Scientific, Professional and Technical Services in the CBD, Auckland 2000 and 2011

Scientific and market research services increased their CBD presence, but these are minnows in the wider picture (Chart 3). 

So it’s today's bigger employment sectors that show signs of decamping – especially management consulting and legal and accounting services.  In fact, 75% of employees in perhaps the most "knowledge-based" sector,  professional, scientific and technical services, were in sub-sectors that have been decentralising.


Chart 3: The Composition of Auckland''s Scientific, Professional, and Technical Service Sector 2011

So what can we take from the past?
There are two broad reasons for questioning reliance on white collar jobs to continue to underpin CBD growth.  The first is structural – a changing mix of jobs (and we haven’t seen the impact of global financial restructuring in New Zealand ... yet), including the international realignment of services suggested by my earlier posting on the white collar sector. 

The second is location preferences – with the analysis here suggesting that the CBD may not be the focus of future white collar growth that city and transport planners hope for. 

The international experience cited above suggests some reasons for this.  There may be others.

For example, people may be more concerned today with the quality of the work environment.   For many, elevator-dependent, air-conditioned, fluorescently-lit, high rise (and high cost) offices may no longer cut the mustard.  The convenience and amenities of working in the heart of the city can increasingly be replicated in suburban centres, without the congestion.

And perhaps issues of resilience, reliable infrastructure, flexibility, and proximity to the work force are important suburban attractions to the investors who employ them. 

Time to ask the hard questions
I don’t have the answers.  But I suspect that the people planning to spend billions on offering better transport to, from, and around the CBD should at least ask the hard questions, and particularly explain the grounds for expecting such a boost in job growth in the CBD and the consequences for their plans (and the city) if it does not happen.

If we cannot rely on the growth drivers of the past – and the evidence suggests that we cannot, not with any confidence at least – then we have to continue to question the very foundations of our plans. 

When I get older losing my hair many years from now - recalibrating retirement (and urban form)

Recalibrating retirement

Retirement in the 21^st century retirement is a bit a fuzzy.  Is it a function of age?  Does it happen when we qualify for superannuation?  Does it depend on paying off the mortgage?  Is it something we decide on, or is it decided for us?  In New Zealand, even the official age of retirement – qualifying for the pension at 65 – is up for debate.

The tradition of an abrupt end to working life is changing, whether from necessity or choice.  For some people it’s about priorities, rebalancing rather than swapping lifestyles.  Some may need to work because of financial or family circumstance, others because it’s what they know and enjoy.  Casual work, mentoring or volunteering, working from home and part-time work are all viable alternatives to outright retirement today.

From rest home to retirement village

And the rest home, where one faded into the Sunset (often a name of choice for such homes) has given way to the retirement village, with connotations of an active community encompassing a range of lifestyles and interests.  Villages offer varied housing choices, too, from small detached and semi-detached dwellings, through terrace units and apartments, to dependent living facilities and nursing units.  Arrangements are flexible and adaptable – key words when thinking about our individual and collective futures in uncertain times.

Residents may still be working.  They may be totally mobile and independent, or they may choose to draw on shared transport services.  Transport needs are further reduced because villages typically offer gymnasia, bowls, swimming pools, other recreation amenities, and restaurant facilities on-site.  They offer security in generally pleasant grounds, sometimes with the capacity to develop gardens within private spaces.   All this adds up to why even people under 60 seek to move into them. It doesn’t necessarily make for demographic balance or social diversity, but it does cater to the varying needs of a growing group of people.

A pointer for urban design

Retirement villages also provide a physical model of how we might best achieve higher density living in urban areas.  In fact, as Mark pointed out, they could play a significant part in shaping Auckland (and other cities) over the coming decades.  Integrated villages offer the prospect of economical construction, higher residential densities, economies of scale in service delivery, and reduced transport demand. So they provide something of an exemplar when we think about where people might prefer to live in a resource-constrained future. 

Villages in the suburbs – the case of Auckland

The Retirement Village Association has 280 members throughout New Zealand.  I looked at the locations of its 61 Auckland-based members. 

First I mapped them using Google Earth.  This shows a wide distribution throughout the city and surrounds, from the town of Warkworth in the north (Totara Park Village) to Pukekohe (Palms) in the south.  The Hibiscus Coast (Maygrove, Red Beach, etc) with it coastal environment north of the metropolitan area is a popular locality. Overall, though, there is quite a wide spread across the urbanised area (Mayfair to Longford Park).

Location of Retirement Villages, Auckland

I also used Google Earth to plot the road distances to the CBD.  There is only one within the Inner City Ring (as described in my last blog, Ageing in the City), none within the CBD, and only two within 5km of it.  11 villages lie between 5 and 15km away, covering the Isthmus and immediate surrounds (lower north, inner west, and upper south), with the biggest group (19 villages) falling in the heart of the post-war suburbs, 15 to 20km distant, and 19 over 20km away. 

Distance of retirement Villages from Auckland CBD

This pattern of dispersal, together with the tendency for older people to favour living some distance from the CBD as described in the previous posting does not support the contention that the future of an ageing population lies in the CBD, even if there is a small minority who through preference or as a result of personal history will do so.

A sustainable choice

Retirement villages offer an insight into alternative ways of increasing the density of settlement and reducing society’s demands on resources.  And they do not rely on over-regulating land use to do so.  In fact, they most likely benefit from an approach that encourages innovation in development and design.

They also capture some the principles associated with increasing the attractiveness of medium density living, including privacy and personal space, security, and quality housing and fittings. These are attributes which compensate for smaller houses, and offer the added advantages of shared transport, accessible services, and local amenities, generally without requiring people to move away from the neighbourhoods within which they have their roots.

Knightsbridge Village, Mairangi Bay, Auckland

A cursory survey of the Auckland villages indicates that most are close to shopping centres, with their attendant restaurants and cafes, and personal, financial and medical services. So the day to day needs of residents are easily served near their homes, while the villages themselves have good access to trade and medical services.

The economics

Retirement Villages provide one physical solution to the economic challenges of developing and constructing medium density housing identified by Matt H.  Assuming that the costs of site acquisition are not excessive and development is straightforward, the village model can deliver affordable density in the suburban and city edge environments preferred by many of our ageing (retiring and not-so retiring) citizens.

Village dwellings are not necessarily cheap, although there are third sector examples which offer fewer frills for increased affordability.  The majority, though, are pitched at households with reasonable equity on hand, or who can structure funding to facilitate purchase through such devices as reverse mortgages.

One positive spin-off from the proliferation of retirement villages is the release of second hand housing to the market, enabling more young families to satisfy their aspirations for a detached home on its own site in the suburbs, and perhaps increasing opportunities for infill in the suburbs.  Consequently, successful multi-housing developments of this sort will create positive ripples throughout the housing market.

Making it work

By and large, the companies that have driven the retirement housing sector have done it well.  They have consequently been good financial performers.  They have created a product that has proven popular in the market.  They have integrated uses on sites, applied good design, and created density without losing the sense of space.  This is a sector that we can expect to grow.  It’s also a sector in which the private sector has shown the way ahead.

Perhaps the main weakness of the retirement village is a social one – the limits imposed by a homogeneous age and social structure, with the richness of diversity lost.  But that does not mean that integrated villages in the suburbs catering for more mixed communities would not work. Broadening the scope of such developments may well be a useful tool in the toolbox of planners seeking to cater for more people on less land.

The capacity to locate such villages on large enough sites in appropriate locations will be critical.  They may be located on brownfields, converted from other uses in good localities.  But most are likely to be away from the centre (and those that are close by are likely to be among the more expensive), with many close to the edge of the city where real economies can be achieved.  Wherever they are located, encouraging the development of retirement - and non-retirement – villages will be an important key to providing for a more sustainable city as it grows and ages.

Ageing in the City

Ageing in the CBD

In responding to my doubts about the employment assumptions behind Auckland’s plans for a new central rail link and what this means for the CBD, Patrick R cited the example of his 84 year old grandmother who enjoys the CBD lifestyle.  Dan talked about the attractions of town centres in Europe where many older people hang out.

If people are attracted to the CBD for its amenities and lifestyle as they are saying, I am not sure of the relevance of the rail link. But I take their wider point: don’t underestimate the attraction of CBD living, and let’s make sure we make Auckland’s CBD attractive.

Interestingly, the European city argument is most relevant because it refers to people ageing in place.  Many of the people Dan observed in Sardinia (and, indeed most other European towns) are likely to have always lived in and around the centre. 

Seeking a balance

Patrick’s observations about diversity of ages in the CBD are important because they highlight a key planning issue in Auckland, and elsewhere.  How to plan for an ageing population, particularly if reduced residential mobility is a feature of ageing?  I agree with Patrick that we are not talking about an “either-or “ situation here, and that our interest in the well-being of the majority should not blind us to the interests and needs of the minority.

There are plenty of people who will move into the centre in new world cities given the chance, making the most of the revival in street life, the performing arts, cafes and restaurants.  This is a reflection of a growing capacity in post-industrial cities for people to exercise choice about lifestyle and where they will live.  But it’s only part of the story. 

Living in the suburbs

The facts and figures I have cited in other postings indicate that the amenities associated with the CBD are also a growing part of the suburban story, a part that justifies greater attention and perhaps greater favour.[1] 

Suburban centres are becoming more like village centres.  This is entrenched in Europe.  Even in large cities like Paris and London the vast majority of people do not live in the centre, but live suburban lives focused on urban centres and urban villages.  The localisation of amenity and living is reflected in a more intimate system of local government than we are used to, though.  Perhaps one of our problems is having a single super city trying to plan for a diverse region.  But that’s another story.

The New Zealand evidence confirms that people here prefer to age where they have their roots, which is overwhelmingly in the suburbs. [2] This is where they have their financial, social and emotional investment. Even moving out of an outsized family home is a wrench.

The Data

So where might older people prefer to live?  I thought it would be useful to map their living preferences.  So I did this for Auckland using the 1996 and 2006 Censuses, assuming (rather unfairly perhaps) that age 50 qualifies you as an older person.  

I divided Auckland into several zones – the CBD; the inner Isthmus suburbs, (Westmere, through Kingsland, to Newmarket and Parnell); the balance of the Isthmus ; and the suburbs of the north, south, and west.  Among the latter I separated those closest to the CBD – Northcote and Takapuna areas further south on the North Shore; New Lynn in West Auckland; and Otahuhu through to Mangere and areas north in South Auckland. 

The figures tell the story.  The upper part of the bars on the graph below represents the growth in the number of older people (using my definition) between 1996-2006.  The lower part is the growth in those under 50.  The squares show the share in each area aged 50 years or more in 2006.   

Where do the over-50s live?

This 2006 figures show that the outer parts of the city have relatively more older people: 36% on the Hibiscus Coast (the coastal suburbs north of the metropolitan area), 30% in towns, and 29% in rural areas.  Only 12% of the CBD population was 50 years or older.  (The total for the city was 25%).

The city’s population grew 22% over the ten years to 2006.  The number of older persons grew 33%, accounting for 34% of Auckland’s growth, but only 11% in the CBD and 18% in inner Isthmus suburbs.  By contrast, oldies made up over half in rural areas and 35% in the outer suburbs

The gains were biggest in the southern suburbs, but the shares of growth accounted for were highest in the Hibiscus Coast (38%) and the west (40%).

Auckland Population Growth 1996-2006 - by Age and Area

Thinking about the next twenty years

There seems to be a preference for suburban and even outer suburban living among older people.  It’s not absolute, but it does suggest that we should be wary of overstating future demand for CBD living as our population ages.

Current Statistics New Zealand projections indicate that the 50+ age group will account for over half of Auckland’s growth in the next 20 years.  (The figure is much higher elsewhere, over 80% in Christchurch, for example – and that was before the earthquakes).  So we should be clearly reflecting their tastes and preferences in our plans.  And their attachments mean that the majority of that growth will take place in the suburbs.

What does this mean for the CBD?

The point is not that people do not want to live in the central city.  Many do, although most are likely to be in transition.  They include migrants and temporary residents. That’s not surprising: New Zealanders on their OE also favour living close to the centre of the cities they live in overseas.  Many others are young, in education, early in their career, in non-family households, or not in long-standing relationships.  For a majority – not all – the central city is a place of transition, traditionally a place where they dwell before stepping onto the housing ladder.  And interestingly, young people building their careers and their independence, people in transition, will be a smaller share of our growing population, not a larger one. 

So to maintain strong residential growth in the CBD we will need to influence more people’s preferences, and especially the preferences of older people.  While some will come, it’s a big – if not impossible -- ask to get the sorts of numbers current plans project. 

We need to think about the numbers as well as the anecdotes, and bring balance to our thinking about the CBD, its place in our lives, and how much we might be spending to make it something which it is not.

[1]           I have argued this elsewhere, e.g. http://cities-matter.blogspot.com/2011/05/sustaining-suburbs.html, http://cities-matter.blogspot.com/2011/10/central-city-dreaming.html

[2]           See, for example, Davey J (2007) “Ageing in Place: The Views of Older Homeowners on Maintenance, Renovation and Adaptation” Social Policy Journal of New Zealand, 27

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